How to manage earthquake risk?

[jomjom]

Hi, I'm thinking of investing in property in New Zealand and was wondering how I could manage earthquake risk. I guess this may sound silly, but are there any particular areas or cities in NZ which are considered relatively safe? I've read that nowhere in NZ is totally safe, but are there safer areas? And how can one mitigate the risk of an actual earthquake with insurance? Does the government aid in any way? Are there private insurance policies for this? Thank you!

[John the builder]

Is anywhere in the world safe??

have you heard of tectonic plates?

Auckland Northland will not get a severe earthquake as neither will Dunedin south but Auckland is made up of volcanoes and there is a risk of tsunami to the whole coast of NZ. This is what insurance is for?

If you dont accept risk dont buy.

[Learning]

They said Christchurch wouldn't have a big quake for another 100 years and then it had two in a matter of months. They say Wellington is 50 years overdue for a big one yet life carries on as normal. Mother Nature does as she pleases when she pleases. NZ is shaped by geological activity.

[lissie]

Been major damage in Australia from earthquakes -tiny little shakes in NZ terms but the building code can't deal with them so all the old brick and stone fell down. Look at the Japanese building if you want to know about managing risk.

Every property is different - but effectively bedrock is good - landfill not good - river flood plain - worst. You do know that we still have sum-insured earthquake insurance here - EQC covers you so long as you have building insurance. That's lot better than most places.

In terms of worrying about your investment - earthquakes should be at the bottom of the list

[Davo36]

Yep Auckland is much better than most places. Check out this map: http://www.teara.govt.nz/en/map/4416...ground-shaking

[eri]

^

interesting

seems to imply rotovegas to taupo

much higher risk than wellywood

[Wayne]

How to manage the risk - insurance!

[Davo36]

^

interesting

seems to imply rotovegas to taupo

much higher risk than wellywood

Yeah true.

Maybe it needs updating? Like maybe it was done before Wgtn got hit by the Seddon one?

The 2010–11 Canterbury earthquakes are outside the areas of greatest statistical risk of high ground shaking. This illustrates the point that large earthquakes may occur anywhere in the New Zealand region, not just in the highest risk areas.

So has to be taken with a grain of salt I suppose.

[Anthonyacat]

Statistics always do. I doubt the statisticians would dare say anywhere was "no risk".

[JAYDNZ]

How to manage the risk - insurance!

Yup!!... I was talking to a fellow chch investor over xmas, he “lost” 5 rental properties during the quakes… He now has 5 brand new houses instead of 5 much older houses and his insurance covered all the lost rent.
As long as you have adequate insurance cover you could be hoping for a quake!

[Timmurray]

Insurance doesn't always come through as it should. The following tale isn't intended as alarmist but just to show that EQC aren't always up to the job they are tasked with.

I had a poor experience with EQC earthquake insurance in Auckland about 5 years ago on my home before it was rented out. The earthquake was widely felt and reported on, and immediately afterwards I saw some wide cracks in my lower house wall, a shifted brick column, cracks in the driveway and a cracked window. Some hairline cracks, which I had already taken photos of, became 5mm wide.

What happened next was a 3 year battle with EQC who sent wave after wave of "expert damage assessors" who all ignored my claims, filled out their tick-box form and announced it was because of ground settlement. I checked up on some of these assessors and their backgrounds were in things like radio operation, and army trainers - nothing to do with structural engineering. So I had to spend $8K on an independent report from a well respected structural engineer who supported my claims with evidence from his test pits and directional force calcs.

Even then, EQC tried to counter me by having a very junior member of their own engineering consultant write a report to contradict mine, but with no calcs or evidence - just unsupported words. As a civil engineer myself I was able to question the EQC's consultant report and have it dismissed, and finally after 3 years and a huge amount of effort I got a payout that covered a replacement wall and driveway.

If I wasn't a civil engineer myself, or couldn't afford the $8K independent study, I probably would have been unable to fight EQC into a corner, and would have had to accept their palm-off that all this instantaneous damage was caused by gradual land settlement.

[JAYDNZ]

Insurance doesn't always come through as it should....

It's the opposite in Christchurch... 100 year old houses that were pretty well buggered before the quake get full replacement... I guess being in a fully qualified "quake zone" helps with such matters.... Wouldn't your own insurance cover the damage???

[jomjom]

Is anywhere in the world safe??

have you heard of tectonic plates?

Auckland Northland will not get a severe earthquake as neither will Dunedin south but Auckland is made up of volcanoes and there is a risk of tsunami to the whole coast of NZ. This is what insurance is for?

If you dont accept risk dont buy.

Hi thank you for singling out Auckland Northland and Dunedin for me. Much appreciated.

[jomjom]

Been major damage in Australia from earthquakes -tiny little shakes in NZ terms but the building code can't deal with them so all the old brick and stone fell down. Look at the Japanese building if you want to know about managing risk.

Every property is different - but effectively bedrock is good - landfill not good - river flood plain - worst. You do know that we still have sum-insured earthquake insurance here - EQC covers you so long as you have building insurance. That's lot better than most places.

In terms of worrying about your investment - earthquakes should be at the bottom of the list

Thanks Lissie that's really helpful.

[jomjom]

Yup!!... I was talking to a fellow chch investor over xmas, he “lost” 5 rental properties during the quakes… He now has 5 brand new houses instead of 5 much older houses and his insurance covered all the lost rent.
As long as you have adequate insurance cover you could be hoping for a quake!

LOL that definitely puts a positive spin on things. Thanks!