08/09/2022
From the 1st of October 2022, many of us will see an increase in our house insurance premiums. Your first reaction may be to yell “ah those damn insurance companies are upping their prices like everyone else!”. However, delve a little deeper into your invoice and changes in the insurance market and you’ll see this is not the sole cause.
The Earthquake Commission (EQC) has increased the cap on the amount they will pay out to homeowners in a disaster (such as an earthquake, tsunami, or natural landslip) from $150,000 to $300,000 (excl GST). To do this, they need to increase the annual EQC levy charged as part of your insurance policy from $300 to $480 per year (excl GST).
So why are you paying more if your suburb's natural disaster risk is relatively low?
Historically, earthquake-prone areas such as Wellington, Canterbury and Hawkes Bay have carried the brunt of the costs, with the average earthquake premiums in Wellington coming in at $1,467 compared to Auckland at $308 (see next slide). The cap increase means the Government, through EQC, will take on a greater share of the risk and liability for natural disasters, while also redistributing the costs across the country to ensure private insurance cover remains affordable and sustainable for high seismic areas.
This will see rising insurance premiums for Aucklanders and those in low seismic areas, and potentially decreasing costs for those in high seismic areas such as Wellington. We say potentially, as insurers will still need to factor rising building costs, increasing weather-related claims and record levels of inflation into their premiums.
Want to know more about potential changes to your premiums? We recommend getting in touch with your insurer and you can also check out the full article here:https://mjw.co.nz/wp-content/uploads/2021/10/mjw110-EQC-cap-change-insurer-pricing.pdf
