Homeowners will notice levy changes from 1 October when the new EQC payout cap comes into effect for all policyholders with residential insurance. The Government has increased Toka Tū Ake EQC’s payout cap to $300,000 (+GST), with private insurers providing over-cap cover up to the sum insured in the event of a natural disaster claim.
Funded by a levy applied to all private residential insurance polices, the higher payout cap also means an increase in the maximum levy per policy, up from $300 to $480 (ex GST).
The changes have been designed to spread naural disaster risk and to help ensure people in high-risk areas such as Hawkes Bay, Wellington and Canterbury can continue to afford residential insurance cover. The reality is, with inflation and the increasing cost of claims generally, homeowners are likely to see their insurance costs increase overall.
What’s changing?
With effect from 1 October 2022 when you take out a new residential policy or renew your existing insurance:
- The EQC payout cap increases from $150,000 to $300,000 (+GST)
- The EQC levy decreases from 20 cents to 16 cents per $100 of cover
- The maximum levy per policy will be $480 (+ GST), up from $300 (+GST)
Who’s affected?
Any property ower with private residential insurance, including owners of multiple self-contained units. If you own multiple self-contained residential units, you will be charged an EQC levy on each unit. The levy amount will depend on the unit’s sum insured.
What is EQCover?
EQCover provides natural disaster insurance after earthquakes, landslips, volcanoes, tsunami, and hydrothermal activity for residential homes, including body corporates, the residential component of commercial buildings and farms, and some areas of residential land.
You automatically have EQCover if you have residential insurance in place with a private insurer. Your private insurer collects the levy on behalf of EQC.
The EQC cap
EQCover is available up to a maximum cover amount or cap for each damage-causing natural disaster event if you have a valid private insurance policy in place at the time the natural disaster occurs.
By increasing the payout cap to $300,000 (+ GST), the Government is accepting more of the risk in the event of natural disaster claims covered by EQCover.
The insurance cover is not changing; just the amount that EQC will contribute in the event of a claim.
The EQC levy
A levy is collected from every residential property owner in New Zealand with private insurance to help fund EQCover. Your private insurer will continue to collect the levy and you will see the levy amount itemised on your insurance invoice.
While the levy will decrease effective 1 October from 20 cents to 16 cents per $100 of cover, because the cap has doubled from $150,000 to $300,000 (ex GST), most people will pay more.
Need help?
Residential insurance is becoming more complex and costly. The best way to ensure you have the insurance cover in place that meets your needs is to talk with an expert. Our qaulified insurance advisers are here to help. They can help you navigate the different policies available and understand the differences between them.
Please get in touch if you need assistance.
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The information provided is intended as general advice only and does not constitute personal financial advice. We recommend you seek professional financial advice that is specific to your objectives, financial situation and needs before making any decisions.
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