Natural Hazards Commission says land cover is ‘a contribution payment, not full cover’ as just over half of NZ homeowners say they expect full insurance compensation for natural hazard damage

The Natural Hazards Commission Toka Tū Ake is urging people to understand the limits of their insurance cover as just over half of insured New Zealand homeowners say they expect full compensation for natural hazard damage to their land.

The Natural Hazards Commission (NHC) recently commissioned a survey asking people about their awareness of natural hazards insurance and their expectations when it comes to natural hazards insurance claims.

“Land cover is specifically designed as a contribution payment, not full cover,” the NHC’s chief executive Tina Mitchell says.

Homeowners pay a Natural Hazards Insurance Levy and this is part of their insurance premium.

This money goes into the Natural Hazard Fund and is used to cover claims after a natural hazard event. The fund is also used to buy reinsurance from international financial markets, meet the costs of administering the NHC scheme and goes towards research and education.

For each natural hazard event, the NHC pays a maximum of $300,000 plus GST towards rebuilding or repairing a residential home. This is called a building cover cap and the Natural Hazards Insurance Levy is currently 16 cents per $100 of the insurance cover amount.

There is also some cover for damage to land, but the NHC does not cover the whole thing.

The NHC says people are covered for land that is:
- under their homes
- under some related buildings and structures like a garage
- within eight metres of their homes and some related buildings and structures
- under or supporting their main access way up to 60 metres from their home such as under their driveway

People can also be covered - to a limit - for some retaining walls, bridges and culverts.

Called the land cover cap, the NHC says this is calculated by adding "the market value of your insured, damaged land" and "the value of your insured, damaged retaining walls, bridges and culverts, to a limit".

An independent valuer decides the market value of land while the maximum value for retaining walls, bridges and culverts depends on the date of the damage.

With 56% of insured New Zealand homeowners saying they expect full financial compensation for natural hazard damage to their land, the NHC says the contribution for land cover is standalone and cannot be topped up with private insurance.

Mitchell says: “The limits of cover available ensures every homeowner across the country gets access to some protection, and helps keep the scheme affordable as it is funded by the homeowners."

The commission knows damage from natural hazards like landslides can be expensive to fix, the chief executive says, and there can also sometimes be a difference between the cost to repair and the contribution allowed for under the scheme.

“New Zealand will continue to experience damaging natural hazard events, so it is important to understand the risks in your neighbourhood and what you are covered for. and while these can be unexpected, what you’re insured for shouldn’t be.”

The scheme is a good contribution but not designed to cover all costs, Mitchell says.