Changes to EQC and how it impacts your insurance

The Government have implemented changes to Toka Tū Ake EQC Building Cover Cap (EQC cap) and EQC levy as part of the EQC Act review following the Canterbury earthquakes. These changes are designed to help keep insurance affordable in high-risk areas throughout New Zealand such as Wellington and Hawke’s Bay.

What is EQCover?

Toka Tū Ake EQC provides natural disaster insurance called EQCover, for residential homes and areas of residential land around your home.

You automatically have EQCover if you have a current private insurance policy for your residential building that includes fire insurance.

EQCover provides cover during natural disasters like earthquakes, volcanic eruptions, tsunamis, natural landslips, and geothermal events.

What is Toka Tū Ake EQC Building Cover Cap (EQC cap) and why is it changing?

If you need to make a claim for natural disaster damage, Toka Tū Ake EQC will cover a portion of your loss, up to a capped amount (EQC cap).

If the damage is more than the EQC cap, your house insurance policy provides cover above the EQC cap.

From 1 October 2022, the EQC cap is increasing from $150,000 to $300,000 + GST.

For example, if a house was damaged in an earthquake resulting in a total loss, and it had a sum insured of $750,000 +GST, Toka Tū Ake EQC will now cover the first $300,000 + GST.

Your house insurer will then cover the difference between the amount paid under EQCover and up to the natural disaster sum insured.

What is the EQC levy and how is it changing?

Part of the amount that you pay for your House insurance is made up of an EQC levy, which your insurer collects on the Government’s behalf to help fund EQCover.

From 1 October 2022, the EQC levy changes from $300 + GST to $480 + GST reflecting the increased coverage cap. To help illustrate this we’ve shown below two recent before and afters explaining the levy’s impact on your house insurance:

The levy applies to each ‘self-contained’ dwelling, so will be more than this if your house includes, for example, a fully self-contained granny flat.

As a result of the increase to the EQC cap, the EQC levy will increase and will likely increase your overall insurance cost.

When do these changes apply to my insurance?

The changes will apply to all new insurance policies (that include fire insurance) from 1 October 2022, and to all existing policies on their next anniversary after that date.