The implications of section 74 notices on your property title

Under Section 72 of the Building Act 2004, a local body is required to issue a building consent for building on land that is subject to natural hazards, where the building work won’t make the hazard situation worse and it is reasonable to grant a waiver, or modification of the Building Code.

Where these building consents are issued, section 74 of the Building Act requires the local bodies to advise the Registrar General of Land, who is required to record an entry on the certificate of title of the land affected, that identifies a building consent has been granted under Section 72 and identifies the particulars of the natural hazard concerned.

Implications for insurance

EQC Cover

All home and contents insurance policies include cover from the Earthquake Commission (EQC) for damage to dwellings up to $100,000 plus GST and contents up to $20,000 plus GST.

Where a Section 74 notice is noted on the title to a property, EQC cover may be declined in part, or whole, under the EQC Act. This depends in part on the nature of the hazard, or the natural disaster that may occur.

General Insurance Cover

Insurers provide top-up cover above the EQC limits. Where a property title has Section 74 Notice, the insurance cover for losses related to the identified hazard could be dependent on the acceptance of a claim by EQC, e.g. if your property is identified as subject to increased landslip risk and the title has this noted (under Section 74), then any damage caused to your home or contents by landslip is unlikely to be covered by EQC. This will probably mean that any top-up cover otherwise available under your domestic insurance policy may not be available for those landslip losses.

If your property contains a notice of this type, you are obliged to disclose this to your insurer. This is information that is material to your insurer in considering the terms of your cover and if not disclosed it may prejudice any claim you may have for natural disaster.

Insurance contracts differ between insurers and it is important you discuss with your insurer or broker how these matters might affect your own cover.

Further information on this topic can be found on the EQC website at www.eqc.govt.nz

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