The Natural Hazards Insurance Act 2023

From 1 July 2024, New Zealand ushers in a new era of natural disaster protection with the implementation of the Natural Hazards Insurance Act 2023. The new legislation replaces the Earthquake Commission Act 1993, marking a significant step forward in how New Zealand manages and mitigates the impact of natural hazards.

Here’s a summary of what you need to know.

• Applies to residential buildings and land only.
• Land is only covered if it is within eight metres of a residential building (as well as the main access way, retaining walls, bridges, and culverts).
• Covers people who insure their residential buildings with a private insurer in the event of earthquakes, landslips, volcanoes, tsunamis, and hydrothermal activity.
• Provides first-loss cover of up to $300,000 guaranteed by the Government and funded by a levy collected by private insurers on behalf of the Natural Hazards Commission Toka Tū Ake (formerly the Earthquake Commission).

With the frequency and severity of extreme weather events on the rise, the Natural Hazards Insurance Act is designed to ensure New Zealanders maintain one of the highest rates of residential property insurance worldwide. The Act incorporates vital lessons learned from recent major events such as the Canterbury and Kaikōura earthquakes, as well as insights from the 2020 Public Inquiry into the Earthquake Commission.

In line with the new legislation, the Earthquake Commission will become the Natural Hazards Commission Toka Tū Ake. The new name better reflects the broader range of natural hazards covered, including tsunamis, landslides, volcanic activity, and geothermal events. It also represents the Commission’s role in educating and supporting New Zealanders in preparing for and recovering from natural disasters.

Natural Hazards Commission Toka Tū Ake will be funded in the same way as EQC, through levies on house insurance policies.

While the overall scope of coverage remains similar, the Natural Hazards Insurance Act introduces several changes designed to simplify and improve the claims process for homeowners, including clearer definitions.

• Mixed-use buildings – clearer guidelines on insurance coverage.
• Land damage – simplified rules for repairing buildings and land after events like landslides.
• Excesses and calculations – streamlined processes for retaining walls, bridges, and culverts.

Claims will be handled by private insurers/brokers without duplication by the Commission, meaning homeowners will have a single point of contact and be able to lodge their claims directly through their broker or private insurer.

Claims for damage occurring before 1 July 2024 will be handled under the Earthquake Commission Act 1993 and referred to as EQCover claims.

Damage occurring on or after this date will fall under the new Act and be referred to as NHCover claims.

If you have any questions about how these changes might affect your coverage, please don’t hesitate to contact your broker. We’re here to help.

Disclaimer
The information in these articles is general information only, is provided free of charge and does not constitute professional or personal financial advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.