Storm & flood damage: who pays – your insurance company or the EQC?

The recent weather events causing major flooding and landslips in Auckland will trigger claims from homeowners to their insurers and the Earthquake Commission (EQC). The insurance and EQC claim process is by no means easy to navigate and it is important to have an understanding of your claim and your entitlements from both your private insurer and EQC to give you the best chance of a successful claim.

Your private insurer will provide cover on the terms set out in your insurance policy. It is important to understand what coverage you have in these types of events, as some of the storm and flood damage to your property may be covered by EQC and some by your private insurer.

Understanding EQCover: What’s covered and what’s not

EQC provides cover under EQCover. EQCover provides natural disaster insurance after earthquakes, landslips, volcanoes, hydrothermal activity, or natural fire for residential homes, including bodies corporate, and residential components of commercial buildings and farms, and some areas of residential land.

You automatically have EQCover if you have residential insurance in place with a private insurer. Your private insurer collects the levy on behalf of EQC.

EQCover does not provide cover to your home and contents for damage by storm or flood, but it does provide cover if a landslip has occurred. It also provides some cover for damage to residential land, such as the land under and surrounding your home, as well as bridges, culverts and retaining walls.

Your private insurer may provide cover for storm or flooding damage to your home and property in accordance with the terms of your private insurance policy. It is important to check and understand the extent of your private insurance coverage and whether it provides cover for damage caused by storm and flooding.

So what is covered by EQCover?

EQCover for house and property

EQCover for house and property is available up to a maximum cover amount or cap for each damage-causing natural disaster event, if you have a valid private insurance policy in place at the time the natural disaster occurs.

The EQCover cap is $300,000 (+GST). Private insurers provide over-cap cover up to the sum insured as set out in your insurance policy.

The amount of cover is determined in the usual way by assessing the damage and the cost to replace or repair the damage to the house and property.

EQCover for land

Private insurers generally do not provide coverage for damage to land, which is covered by EQCover.

EQCover is limited to land that is within your property and includes land that is under and within 8 meters of your home and outbuildings (e.g. shed or garage); and land under or supporting your main access way (such as a driveway) up to 60 meters from your home. Your driveway surfacing is not covered so it is important to check and understand the extent of your private insurance coverage and whether it provides cover for damage to your driveway surfacing.

EQCover also provides some cover for bridges and culverts above damaged land and some retaining walls that support the home and outbuildings or the insured land.

Landscaping costs are not covered so it is important to check and understand the extent of your private insurance coverage and whether it provides cover for damage to landscaping.
EQCover is capped at the land value and is commonly referred to as “EQC land cap”. EQC land cap is calculated in 2 parts:

• Market value of the insured land lost or damaged; and
• Indemnity value of the insured land structures (bridges, culverts, retaining walls).

EQCover for land claims are generally cash settled and EQC will pay the lesser of either the cost to repair or reinstate the land damage or the EQC land cap.

Claims for flood damage not covered by EQCover

Not all damage caused by flooding weather events is covered by EQCover. Most private insurance policies will provide cover for damage not covered by EQCover so it is important to understand what your private insurance covers in these types of events.

Making a claim for storm and flood damage

To lodge claims for natural disaster damage you can contact either your private insurer or EQC direct. In most instances, your private insurer will manage the EQCover claim and will be your single point of contact. It is simpler to contact your private insurer in the first instance and also means you can make claims for damage not covered by EQCover at the same time.

Time is of the essence for EQC claims

It is important to get your EQC claim in as soon as possible. Generally you have 3 months from the event in which to make a claim. If it is not made in that time, then the claim for EQCover will be subject to additional considerations that could mean your claim is declined.

Private insurance claims are subject to the usual statute of limitation laws being 6 years from the event, but like an EQC claim, you should get your claim in as soon as possible given the passage of time can affect any assessment of damage to your property and impact your claim accordingly.

Take photos of flood damage to support your claim

It is helpful to the assessors for both the private insurer and EQC if you can take photos showing the damage to your house and property as soon as possible after the event. You should focus on the scope and the extent of the damage to your property. These photos will be important in establishing proof of damage to the property.

Emergency repairs to prevent further damage

EQCover includes cover for urgent or ‘emergency’ repairs that are needed to make your home safe, sanitary, secure and weathertight. EQCover requires homeowners to take reasonable steps after a natural disaster to preserve their property from further damage.

Such work includes checking supply of services such as water and gas; board up broken windows; temporary repairs to holes in the roof or walls; and get essential services such as toilet and water services reinstated as soon as possible.

This work can be done without EQC’s approval, and prior to making your claim, and requires you to provide copies of the invoices for the works and proof of damage when it comes time to claim for reimbursement of these costs.

Be informed for the best chance of a successful claim

The key to kick starting your claim is to act swiftly armed with an understanding of your coverage from your private insurer and EQC and your entitlements to address the damage and loss to your property. It is important to both collect evidence of the damage and deal with urgent repairs at the earliest opportunity.

For additional information about the claims process and how EQCover claims are managed, you can download the EQC information sheet here.