EQCover: What Toka Tū Ake EQC covers for your home

Joanne Rolley has been farming at Le Bons Bay on Banks Peninsula for more than 40 years. While she has experienced floods before, last December’s was the worst.

The water started coming over the bridge 100 metres from her home around 6pm, nine days before Christmas.

She rang her son, who lives in the North Island, to let him know the place was flooding but not to worry.

“He said all the sensible things to me – to put any important paperwork up high and to turn off the power before we evacuated.”

Joanne and a neighbour evacuated to a two-storey holiday home next door.

“By this stage, water was rushing down the road at great speed with logs and rocks.”

At the holiday home, they started rescuing valuables when water started coming into the property.

“It was a bit traumatic,” Joanne said.

Not long after, the Akaroa Fire Brigade started evacuating the whole area.

The clean-up

Once the worst was over, Joanne was anxious to get home and assess the damage.

Her home had got off reasonably lightly. Water had come into the back porch because it sits lower than the main part of the house. And silt and rubbish had gone through her precious vegetable and flower garden.

However, her driveway was washed away.

Joanne didn’t realise she could put in an EQCover claim for the driveway, until she heard others talking about what damage they could and couldn’t claim for.

“So, I gave my insurer a ring, not thinking that I’d have much show of anything, and then the insurer said we actually work with EQC, and from there it was easy.”

After having her property assessed by the insurers and getting quotes, the driveway was fixed. Now, she’s just waiting for spring to see which bulbs survived.

EQCover for your home

Toka Tū Ake EQC provides natural disaster insurance – called EQCover – for homes and some residential land areas.

You automatically have EQCover if you have private house insurance which includes fire insurance – which most policies do. Part of the insurance premium includes a levy which goes to Toka Tū Ake EQC to manage and settle natural disaster claims.

In the event of a natural disaster, you have up to $150,000 (plus GST) worth of EQCover for damage to your home – this is commonly called the ‘EQCover building cap’. While the cap increases to $300k from 1 October this year, this change could take up to 12 months as individual policies come up for renewal. The revised cap will apply to all new policies issued from October.

If the damage to your home is over the cap, your private insurer should pay out – up to the claim limits of your policy. It’s likely EQCover and your private insurer will deduct an excess, too.

EQCover for damage to land

EQCover is provided for land under or within 8m of your home and certain outbuildings, like a shed or garage. Land under or supporting your main accessway to the property is also covered, up to 60m from your home.

To qualify, land must be within the boundaries shown on your Record of Title. It may also include a right of way over a neighbouring property (if it’s a legal easement).

Some cover is also provided for bridges and culverts within the dimensions mentioned above, and some retaining walls that are necessary to support buildings and land.

The payout for residential land is different to the EQCover building cap for your home. EQCover will cover the cost to repair damage to that insured land, or the value of the land – whichever is less. The maximum payout is capped at the land value.

If your property is damaged in a storm or flood, EQCover will only provide cover for the residential land, not your house.

Natural disasters that are covered by EQCover

• Earthquake

• Natural landslip

• Volcanic eruption

• Hydrothermal activity

• Tsunami

• Storm (land cover only)

• Flood (land cover only)

• Fire which occurs because of any of the above

What to do after a disaster

In the event of a natural disaster, your private insurer will assess, manage and settle your Toka Tū Ake EQC and private insurance claims. This means you have one point of contact, rather than having to contact both Toka Tū Ake EQC and your insurer.

While making sure your family and friends are safe is the first step, the second step is to gather documentation to show the damage and ring your insurer ASAP.

Take as many photos or videos as possible, especially before making any emergency repairs, moving items or throwing things out.

You’ll need to discuss any non-urgent repairs with your insurer first.

Once your claim is lodged, your insurer will discuss with you how best to evaluate the damage. Engineers or other experts may be brought in to do assessments and to estimate repair costs. For a land claim, it’s likely a registered valuer will visit.

When your claim is ready to be settled, your insurer will get in touch and explain the outcome and the settlement amount (minus any excess). Then you can get on with repairs.

Insurance Q&A

Q. What’s not covered under EQCover?

A. EQCover doesn’t apply to any household contents, or to vehicles, tennis courts, boats or trailers. Fences and pavings, or other artificial surfaces, aren’t covered either. For a comprehensive list see eqc.govt.nz/what-we-do/what-youre-covered-for.

Check your house and contents insurance to see whether you have enough cover to replace these items should the worst happen.

Also look at what cover you have with your private insurer for retaining walls, bridges and culverts.

Q. What is sum insured?

A. Unless you have a full replacement policy, the maximum insurance companies will pay is the sum insured. If the rebuild costs are more than the sum insured, you will have to meet this cost.

Homeowners are responsible for estimating the sum insured. You can get an indication of what your sum insured should be by using the Cordell Calculator, an independent online tool to calculate the cost of rebuilding your home if disaster strikes.

If you haven’t specified a sum insured, you’re probably relying on the insurer’s default sum insured – an estimate based on the size of your house and a typical rebuild cost.

If you rely on the default sum, you risk being caught short if disaster strikes.

If you choose a higher sum insured, you’ll be charged a higher premium. But it might not be much higher. Ask your insurer how much an increase will cost. A slightly higher premium is a good investment to make sure your house is fully covered if it’s a total loss.

Q. What isn’t covered in private house insurance cover?

A. House insurance will cover you for sudden and accidental loss. Gradual wear and tear isn’t covered. Neither is intentional or reckless damage by you or a guest or tenant.

Retaining walls may need council consent to be covered, and there is generally a cap on cover. For example, with AA Insurance it’s $50k.

Check the list of exclusions in your policy document to check what isn’t covered. For example, any structural alterations to your house may not be covered if you haven’t told your insurer you’re renovating.

Q. Is it important to shop around for an insurer?

A. Every time your policy comes up for renewal, it’s important to check whether the cover you have will be enough if the worst happens.

You can also compare the cost of your current policy with other providers to see whether you’re getting the best deal.

You can check out our policy comparison to see whether you’re paying over the odds.

In our most recent survey, there was a difference of more than $2000 between the cheapest and most expensive policies for our standard-sized house.

Q. How can I find out the risk profile of a house?

A. Check with your regional or local council whether it has hazard maps. These will indicate natural hazards in the area, such as erosion or sea level rise. Your local council’s district plan may also list natural hazards in the area.

You can also check the property’s Record of Title (previously called a Certificate of Title) as well as the LIM. The LIM, or Land Information Memorandum, is a council-issued report detailing all the information it has on file about the property. This can include consents, planned roads, utilities and drainage works, and information on natural features which can affect the property, for example flooding, erosion, subsidence and wind risk.

The Government’s Adapt and Thrive: Building a Climate-resilient New Zealand (2022) states that improved LIM information is on the cards. New laws about the information provided in LIMs is expected to go through Parliament by the end of 2023.

Q. I own a shared property – how will that make a difference to an EQCover claim?

A. Whether it’s fee simple, unit title, cross lease or company lease, you need to know what type of property you own and how it will affect insurance.

If the owners of shared property each have different types of insurance, or no insurance at all, it may complicate any claim to repair damage.

After the Christchurch earthquakes in 2010 and 2011, some EQCover claims had property owners with differing levels of damage to their home, covered by different insurers and coverage. This led to delays in getting claims accepted and work done.

Before disaster strikes, it’s best to reach agreement with all parties about the level and type of insurance, and how it will apply to each home and any shared areas.

For any outside areas that aren’t covered by insurance, it’s a good idea to agree who will carry out any repairs and how this will be paid for.

Q. I rent – do I need contents insurance?

It’s recommended that tenants take out contents insurance – sometimes known as renters’ insurance – to protect their belongings.

While your landlord will have house insurance, that won’t cover your personal belongings if there’s a natural disaster or a break-in.

While you may think you don’t own much stuff, think about the cost if you had to replace your laptop, smartphone – indeed everything you own. And all at once.

Changes to Toka Tū Ake EQC

The Natural Hazard Insurance Bill aims to make claiming for EQCover after a natural disaster easier.

After the Canterbury earthquakes in 2010 and 2011, more than 583,000 EQCover claims were received for damage to about 168,000 properties.

An inquiry into how those claims were handled found the organisation wasn’t prepared for the magnitude of the events.

Dr David Clark, the Minister Responsible for the Earthquake Commission, said the bill aims to improve the Toka Tū Āke EQC scheme “so future New Zealanders don’t have to go through the same traumatic experiences as the people of Canterbury”.

The bill incorporates several recommendations by the Dame Silvia Cartwright Public Inquiry.

It introduces a dispute resolution service and a claimant code, along with clearer rules about claims for mixed and multi-use buildings.

It also clarifies regulations for repairing buildings and land following a landslip or other land damage, and simplifies the excesses and calculations for retaining walls, bridges and culverts.

Submissions have closed for the bill, and the select committee is expected to report back to Parliament later this year.

Thanks to Toka Tū Ake EQC for their support with this article.