insurance direct through EQC. has anyone done it? (section 22 EQC act)

[sparxNZ]

Hi all.

Has anyone had any experience dealing directly with EQC on natural disaster insurance under section 22?
I ask because I have several policies coming up for renewal and the quotes have been coming in up to 20% higher than last year. We are also in an equity position where we can afford to replace any individual building with cash but cannot afford to replace all of them at the same time.
Coupled with the philosophy that insurance is almost never a good deal and that one should never insure anything one can afford to pay cash to replace (unless one is certain they will lose the asset before paying out it's value in premiums plus opportunity cost), it would seem that individual private insurance policies are not suited to us and that cover only for an event that could compromise the entire portfolio simultaneously might be best.

Any advice from anyone with direct experience with EQC in relation to the Earthquake Commission Act 1993 S.22 would be greatly appreciated.

Kind Regards
Matt Watson.

[hawkeye]

Your philosophy is fine if you are the ministry of education with the government funding you or if all of your properties are scattered over the country or world but if they are close enough that you could lose all or many in one event you need to insure them. EQC covers the land also not just the buildings.

If you really have enough cash put aside that the cost of insuring them all is more each year than the premium you pay and you are sure you couldn’t lose more than one in any event you may be right. But you need to save that full amount each year to make your own fund so you have the cash if necessary. House Insurance also usually has liability insurance of $1m to cover damage to other people’s property so for example if your house burns down the neighbours it covers them too for when their insurer comes after you.

However if you insure for natural disaster with EQC that would cover the land and up to $150k for buildings for natural disaster and so you are only covering yourself for fire or other localised damage and the balance above $150 k for earthquakes , driveways , retaining walls, walls and fences etc. You might still need liability insurance. An insurer also pays loss of rent insurance so you might need to be able to handle a couple of years loss of rent too while the insurers muck around.

The other complication is if there are more than 1 event and damage is apportioned over the 2 events. EQC May have to pay more than one lot of $150k but it might take years for them to decide how to split the damage over the events as it did in Christchurch. Perhaps if you are one of a few dealing with EQC directly you might be able to get through the system more quickly if everyone else is having to go through their insurer first.

It costs much more than you might think to rebuild. You need to factor in demolition, architects and engineers fees, council fees etc. special foundations etc. A house that is worth $500k including land might cost $800-$900 to rebuild. Maybe you can just sell “as is” for the land but the land after an earthquake may not be worth anything.



LAJ