Many New Zealanders in the dark about natural hazards insurance

Many New Zealanders in the dark about natural hazards insurance | Insurance Business New Zealand

Property

Many New Zealanders in the dark about natural hazards insurance

Commission releases checklist for homeowners

Property

By
Roxanne Libatique

A recent survey commissioned by the Natural Hazards Commission Toka Tū Ake (NHC or Natural Hazards Commission) and conducted by consumer intelligence company NielsenIQ has highlighted a gap in New Zealand homeowners’ understanding of their insurance coverage related to natural hazards.

The findings indicated that only 33% of homeowners with insurance are confident about what their policies cover in terms of home damage after a natural disaster. Moreover, just 26% of respondents felt sure about the extent of coverage for land damage.

“We know people don’t always have information on what they are covered for front of mind. Life is busy, and we often juggle information overload, but it can cause confusion and frustration after a disaster if homeowners don’t know what they are protected for, especially if people find they don’t have the cover they thought they did,” she said.

However, Mitchell stressed the importance of being informed about one’s insurance policy in a country with a substantial risk of natural hazards such as earthquakes, floods, landslides, and volcanic eruptions.

“As New Zealanders, we live in a country that is particularly prone to natural hazards, including landslides and floods, earthquakes, and volcanic activity. Understanding your risk and your insurance cover are critical to looking after your home and family. We are urging people to understand how their insurance covers them now, before they need it,” she said.

Natural Hazards Commission’s limitations

The Natural Hazards Commission, formerly known as the Earthquake Commission (EQC), provides initial coverage for damages caused by natural disasters to insured residential properties and some land. This coverage is funded by a levy included in home insurance policies, offering financial support for repair costs up to $300,000 for homes and holiday homes. However, land coverage is limited and subject to specific conditions.

Mitchell pointed out that while the natural hazards insurance scheme in New Zealand offers unique financial support for land damage, it is important for homeowners to understand its limitations.

“It is important to know what you are covered for, and where those limits are, so you can take practical steps to strengthen your property before disasters occur. For example, strengthening retaining walls and considering how waterways might impact your property are good things to check regularly. The scheme is there to help with a financial contribution, but the statutory limits mean it may not cover all of the damage,” she said.

In the event of a natural disaster, she emphasised the importance of contacting insurers promptly to initiate claims.

The commission’s “know your cover” checklist that your clients can do includes:

regularly reviewing private insurance policy to ensure it meets their needs
being aware of the specific areas of their land that may not be covered under natural hazards insurance
educating themselves about the natural hazards that could affect their property and the surrounding area
consulting with professionals, such as builders and engineers, for advice on reducing risks
planning ahead for post-disaster scenarios, as insurance claims and the rebuilding process can take time