Sophie Macfarlane
Property
From the 1 July 2024, the Natural Hazards Insurance Act 2023 (NHI Act) replaces and modernises the Earthquake Commission Act 1993 (EQC Act). In line with the new legislation, the Earthquake Commission Toka Tū Ake (EQC) has become the Natural Hazards Commission Toka Tū Ake (NHC).
This change marks a significant step forward in how New Zealand manages and mitigates the impact of natural hazards.
The new name better reflects the broader range of natural hazards covered by the Act, which include tsunamis, landslides, volcanic activity, geothermal events, and fires caused by specified natural hazards. The NHI Act incorporates lessons learned from the Canterbury earthquakes, the Kaikōura earthquake and other natural hazard events, as well as insights from the 2020 Public Inquiry into the Earthquake Commission. These updates are timely, given the increasing challenges posed by climate change and extreme weather events.
It is important to note that the NHI Act does not apply retrospectively; it only covers claims associated with losses occurring on or after July 1, 2024. Claims for losses incurred before this date will continue to be managed under the EQC Act.
The NHI Act establishes a flat-rate excess for both building and land claims, making it easier for customers to understand their financial obligations. The calculation for covering retaining walls, bridges, and culverts has shifted from indemnity value to undepreciated value. Retaining walls will be covered up to a maximum of $50,000 plus GST per dwelling, while damaged bridges and culverts are covered up to a maximum of $25,000 plus GST per dwelling. Retaining walls, bridges, and culverts do not need to be within the same land holding as long as the insured party has an insurable interest in them. However, the building cover cap remains unchanged at $300,000 per dwelling, subject to review at least every five years.
The NHI Act aims to enhance the homeowner’s experience through a new dispute resolution scheme, a Code of Insured Persons’ Rights, a complaint procedure, and an independent review procedure. This new code clearly defines homeowners’ rights and provides a pathway for addressing formal complaints. If a homeowner believes their rights have been breached, they can seek resolution through an independent review. The dispute resolution scheme also offers access to external services for any unresolved issues, ensuring accountability in addressing disputes.
It is important for prospective property buyers to be aware that the NHI Act includes several grounds for declining a claim. These include situations where a natural hazard notice is present on the title, where existing structures do not meet appropriate building standards, and where an easement or other necessary legal documentation is not in place. This highlights the importance of having a lawyer review the property title before finalising any purchase or sale so appropriate disclosures can be made.
Overall, the NHI Act aims to make it easier and faster for homeowners whose properties are damaged by natural hazards.
If you need assistance navigating your options regarding a Natural Hazards Claim, please reach out to our experts at Cavell Leitch. We are here to help you understand your coverage entitlements, limits, and what they mean for you.