Kaikoura Earthquakes

Simpler process for settling Kaikoura Earthquake claims

An agreement between private insurers and the Earthquake Commission (EQC) will simplify how home and contents insurance claims are resolved for people affected by the Kaikoura Earthquake.

Under the agreement, private insurers will act as EQC’s agents and receive, assess and settle home and contents claims for earthquake damage from their own customers, even those claims that are under the EQC cap.  EQC will assess land damage as land is not covered by private insurance policies.

Customers are encouraged to lodge a claim with their private insurer in the first instance.  Where customers have already lodged home building or contents claims with EQC, these will be passed onto their insurer by EQC so there is no need for people to make another call.

Tim Grafton, Insurance Council Chief Executive said, “We are approaching this in the spirit of good faith to benefit homeowners who will have their own insurer manage their claim from beginning to end.  This will deliver efficiencies for everyone by reducing double handling and speed up settlements.”

EQC Chief Executive Ian Simpson said the simplified approach for home and contents claims is an example of how insurers and EQC can work together to improve the claims process for customers.

“This approach draws on the experience we have gained from settling hundreds of thousands of claims following the Canterbury, Eketahuna, Cook Strait and February 2016 earthquakes. The new approach will be more efficient and will mean we can make the best use of the country’s loss adjusting expertise to deliver a better result for customers,” he said.

The agreement is between the EQC and the Insurance Council of New Zealand’s members who offer home and contents insurance.

The simplified approach will not change customers’ entitlements under their insurance policy or the EQC Act.

For more information:

MOU backgrounder

EQC and Insurers want a good claim experience for people making contents and residential building insurance claims arising out of the Kaikoura earthquake event.

EQC and the Insurers have together worked hard, in urgent circumstances, to identify a basis on which each Insurer can assess and settle EQC claims.

In the time available it has not been possible to think of everything. Regular and timely communication is continuing at a senior and operational level to identify and resolve potential issues as they arise.

The following insurers will be appointed as an agent of EQC for their own customers and will be legally responsible, on EQC's behalf, for lodging, assessing and cash settling certain claims arising out of the Kaikoura earthquake event:

  • AA Insurance Limited
  • Farmers' Mutual Group & FMG Insurance Limited
  • IAG New Zealand Limited (State, AMI, Lumley, NZI and Lantern brands)
  • Medical Insurance Society Limited (MAS brand)
  • QBE Insurance (Australia) Limited
  • Tower New Zealand Limited
  • Vero Insurance New Zealand Limited
  • Youi NZ Pty Limited

As an agent of EQC, insurers have agreed to act as they normally would as professional managers of claims and in accordance with the EQC Act and EQC’s policies.

Insurers will receive EQC Act training to ensure compliance with the Act.

Any insurer that has not already joined this MOU can join at a later stage by making that arrangement with EQC.

All settlements up to the cap (usually $20,000 for contents and $100,000 for home dwelling) paid by the Insurer to a customer are binding on EQC. Upon receipt of an invoice from the insurer, EQC will pay the insurer within five business days.

The following claims are out of the scope of this MoU:

  • all land claims;
  • all claims relating to properties with prior EQC earthquake claims that are still open or otherwise unresolved (including all outstanding remedial claims, complaints and litigation from the Canterbury Earthquake Events)

Insurers will identify vulnerable customers and prioritise using the Human Rights Commission’s guidelines for insurers.

Insurers will be paid for their claims handling expenses by EQC. These agreements are being negotiated bilaterally between individual insurers and EQC.

EQC will audit claims from time to time to ensure compliance with the EQC Act.

EQC and insurers will obtain appropriate privacy waivers from customers to share information to expedite the customer’s claim.

  • A Steering Group (senior members of EQC and insurers) will:
  • have oversight of all aspects of the claims management process, with a view to early identification and resolution of any issues arising in future
    establish and monitor appropriate KPI’s (e.g. settlement timeframes)

A protocol will be developed to address how customer complaints will be handled.  At present both EQC and insurers have existing but separate complaints processes. The new process will mean the customer will continue to have access to free, independent dispute resolution.

The MOU for Claims Management of the Kaikoura Earthquake Events

Please see this link for details:  MOU for Claims Management of Kaikoura Earthquake Events

Frequently Asked Questions

Please see this link: ICNZ and EQC frequently asked questions on Kaikoura insurance claims

Insurer Information

AA Insurancehttps://www.aainsurance.co.nz/kaikoura-earthquakes/

Useful Links

Earthquake CommissionDownload EQC fact sheet
Guide to taking photos to support your insurance claim
Farmers' fact sheet
Finding supportSupport fact sheet
Rebuilding post earthquakeA guide for homeowners rebuilding after the Hurunui/Kaikōura earthquake.

Vulnerability of Citizens

Insurers are concerned about the health and wellbeing of the people affected by the 14 November earthquake, and in particular those who are most at risk to extreme hardship.
The Human Rights Commission have developed best practice guidelines on prioritising vulnerable customers for insurers. They can be found here.

All insurers have their own processes for identifying vulnerable customers, but please make your insurer is aware if you are elderly or have small children, have health issues, have mental or physical disabilities, are under financial stress or are geographically isolated.

Business Interruption Insurance


Business Interruption policies provide businesses with cover for loss of income in a disaster.  Policies can provide cover in a Natural Disaster such as the Kaikoura earthquake if this option has been purchased.  Each policy is specific in the level of cover it provides, and there are sub-limits that apply for different types of losses.

Policies will usually provide cover for loss of insured gross profit, rent or revenue and increased costs of working.

The deductible (or excess) that applies to a BI claim is expressed as a time deductible or a “stand down period” There has be damage to property before the BI policy is activated.

If the business interruption loss is not because of the insured property damage, then extensions for prevention of access, failure of utilities, property damage to customers or suppliers, and closure of transport routes including ports and airports.  Cover under these extensions is usually limited under the policy to something like 10% of the gross profit sum insured. A stand-down period of 30 days usually applies.

Cover is limited to losses that occur within what is referred to as the indemnity period.  This is the period specified in the cover that starts when the damage occurs and ends no later than the time specified in the schedule.  Some BI policies contain a “deferment” of the indemnity period that allows the business to receive BI claim payments only when they suffered interruption such as when they may need to move out of the building for repairs sometime after the event causing damage.

Insurers have several Broker specific wordings where cover may differ.  The policy, schedule and any endorsements should be read together to determine what cover is in place and any specific limits.  Any queries should be referred to your Broker.


Case studies (fictional)

  1. Situation: A Wellington Bar has been ordered by local authorities to close and send staff home.  There’s no damage to stock or premises but they’ve been denied access to premises because there are safety concerns for the building next to them.

What is covered?

Answer:  You may have a denial of access extension to your business interruption policy typically around 10% of the gross profit sum insured. Normally there is a stand down period of between 7 to 30 days.

  1. Situation: A supermarket in Kaikoura is closed as it has no water or gas because of damaged infrastructure.

What is covered?

Answer: You may have a loss of supplies extension to your business interruption policy typically around 10% of the gross profit sum insured. Normally there is a stand down period of between 7 to 30 days

  1. Situation: A café on SH1 has no damage but doesn’t get customers anymore as the road 50km away is closed.

What is covered?

Answer: You may have a denial of access extension to your business interruption policy typically around 10% of the gross profit sum insured. However, it’s normal for there to be a maximum radius of any damage to roads that affects your business. This may vary from 500metres to 20km.  Normally there is a stand down period of between 7 to 30 days. Talk to your Broker.

  1. Situation: A tourism business is suffering because people don’t come to Kaikoura anymore because they are worried about a future earthquake.

What is covered?

Answer: No cover unless you have loss of attraction coverage extension to your Business interruption policy. Coverage availability is not common in New Zealand.

  1. Situation: A farmer has a damaged cowshed and so can’t milk his cows.  He’s had to give his stock to the neighbouring farm to milk.

What is covered?

Answer:  The Farmer may have an increased cost of working coverage that may cover the out sourced milking costs. Each farmer’s situation will be different, so we encourage you to contact your insurer to understand what cover is available.

  1. Situation: A farmer has no damage to his farm and is milking his cows and having to throw the milk away as milk tankers can’t get through.

What is covered?

Answer: The Farmers are likely to have some form of cover for non-collection of milk or prevention of access through Farm Contents/Assets policies and/or Business Interruption policies.

You may need to have selected these specific covers.

These covers are usually limited to a sum insured.

Each farmer’s situation will be different, so we encourage you to contact your insurer to understand what cover is available.


Government support available to individuals and businesses

  • 0800 Government Helpline is 0800 779 997 7am-9pm seven days a week for financial support for individuals, businesses and sole traders.
  • Stress counselling and support, call the Earthquake Support Line on 0800 777 846

www.workandincome.govt.nz/documents/eligibility/earthquake-nov-2016.pdf (PDF)


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