What is EQC?
Toka Tū Ake EQC is a New Zealand crown entity investing in natural disaster research to help communities reduce their risks, and providing home insurance to help communities get their lives back on track after an event.
Why is the EQC cap being raised?
The Government has raised the cap as part of the EQC Act review following the 2011 Canterbury earthquakes to help keep insurance affordable in high-risk areas around the country.
New Zealanders are incredibly fortunate to live in such a beautiful country, but we’re also aware how volatile and powerful this land can be. By increasing the EQC cap housing insurance will continue to be affordable for anyone living in New Zealand.
What does this mean for you?
Currently house insurance cover is made up of two parts: cover provided by EQC and cover provided by your private insurer. Your private insurance premiums are calculated based on the individual risk of your property, which means people living in high-risk areas generally pay a higher premium than those living in low-risk areas.
With EQC taking on a greater portion of your cover, the cost of your premiums is likely to change, and the amount you pay in EQC levies is set to increase from $345 to $522 (including GST).
How much will my premiums be?
Unfortunately there’s not a “one size fits all” methodology to providing insurance cover, and the cost of home insurance is influenced by a large number of factors. The value of your house and the region you live in will be two of the largest contributing factors that determine your premiums.
To help break this down further, the following pie graphs illustrate how your premiums are now calculated based on the governments changes. We’ve provided graphs for Auckland and Wellington:
When does the change come into effect?
The EQC cap increase affects all new House and Landlord’s insurance policies (that include fire insurance) in New Zealand from 1 October 2022, and all renewing policies on their next anniversary after that date.
Setting your house sum insured
Deciding how much to insure your home for can be tricky. You need to ensure the total Sum Insured amount on your Policy Schedule reflects the likely cost of rebuilding your home as accurately as possible. This includes an allowance for additional features such as fences, driveways, garages, outbuildings, landscaping, swimming pools, and tennis courts, to name a few.
In addition this needs to cover additional costs such as professional fees, demolition, and removal of debris. The Sum Insured is not the price you paid for the property or the rateable value and does not include the value of your land.
If you’d like some assistance calculating the ideal Sum Insured amount, we highly recommend obtaining a Replacement Valuation from a registered Quantity Surveyor.
Or you can make use of the Cordell Calculator (click here), a free online tool that offers an easy way to estimate your sum insured amount – just enter your address and check the property details listed. The calculator will do the work for you. The calculator includes professional fees, demolition, removal of debris and GST. It also shows you information that is on the public record about your house.
