22 August 2022

Changes to Earthquake Commission cover

The Government is increasing the amount of cover Toka Tū Ake EQC (EQC) provides home and residential unit owners in the event of a natural disaster (earthquake, tsunami, volcanic eruption, hydrothermal activity and natural landslip).

Home and residential unit owners pay for this cover through a EQC levy, which is included in their insurance premiums and passed on to EQC by their insurer.

Maximum EQC amounts and sum insured  

The maximum amount of EQC cover will rise from $150,000 to $300,000 (plus GST). This means EQC will cover up to the first $300,000 damage caused by natural disasters.

If your home or residential unit has a sum insured that is more than the maximum EQC cover, your home insurance policy provides top-up cover for the cost of the damage, up to your sum insured.

This change takes effect when insurance cover renews on or after 1 October 2022.

Increases to EQC levies for homeowners

Higher EQC cover means the amount homeowners pay for this cover will also rise. The annual EQC levy for home and residential unit holders will increase from a maximum of $300 per unit to a maximum of $480 per unit (plus GST).

As a home or unit owner, the EQC levy you pay will depend on your sum insured. If your sum insured is less than $300,000, the levy will be proportionately lower than the maximum amount. You will pay the EQC levy increase when you renew your insurance on or after 1 October 2022.

Multiple residential units and EQC

If you own a property with multiple residential units, you pay an EQC levy on each unit based on its sum insured. If a unit has a sum insured less than $300,000 (excluding GST), the levy for the unit
will be correspondingly lower than the maximum amount.

Are all home insurance policies affected? 

The EQC levy change will affect all residential home/unit insurance policies regardless of insurance company. The levy shows on your tax invoice as Earthquake Commission Levy.

About EQC cover

As well as providing natural disaster insurance for residential homes and some areas of residential land, EQC also provides some cover for storm or flood damage for residential land.
(Note: Your home insurance policy does not cover residential land).

For more details on what EQC covers, please visit the EQC website.

For more information

Please get in touch with your broker if you want to know what these changes mean for your Home insurance policy. Your broker can also review your sum insured with you to ensure it accurately reflects the amount you need to repair or rebuild a house or residential unit in the current high inflation environment.

Client Advisory