Impacts of EQC Changes – Video

The EQC have changes coming effective 1 October 2022.

Key points below:

  • EQC Cap currently $150,000 plus GST per unit rising to $300,000 plus GST per unit effective 1 October 2022.
  • Premium increasing from $300 plus GST per unit to $480 plus GST per unit.
  • Natural Hazards Insurance Bill will replace the Earthquake Commission Act 1993.  This looks like it may happen around 1 December 2022 dependent on assessment and unless deferred by order-in-council.
  • The amount of FENZ Levy changed should be unaffected by this change

The Earthquake Commission, EQC, provides natural disaster insurance for residential homes and some of the land under the homes. The Earthquake Commission Act (EQC Act) defines natural disaster as an earthquake, natural landslip, volcanic eruption, hydrothermal activity, or tsunami or natural disaster fire. For residential land only, natural disaster includes storm or flood. EQCover in 1993 consisted of a $100,000 cap per residential dwelling and $20,000 of personal contents per policy. In 2019 the residential dwelling cap increased to $150,000, cover for personal contents was stopped, and the rate of EQC levy increased to 0.20%. EQCover automatically applies to residential dwellings insured for the peril of fire, but not for residential dwellings insured for natural disaster fire only. Where a fire policy exists, and the terms of the EQC Act are met, EQCover is compulsory. Although the EQCover cap is doubling to $300,000, the levy charged per residential dwelling is not. Instead the EQC levy is reducing to 0.16% (down from 0.20%) equivalent to a maximum EQC levy of $480 plus GST per residential dwelling.

When EQCover was increased to $150,000 in 2019, the change occurred when each policy renewed. In the words of EQC, it took twelve months to implement the increase in cap as it was effective as of the insurance renewal date for existing polices or the inception date for new policies. EQC are currently unable to confirm the same will occur with the new increase but it is assumed it will. The previous change sets a precedent, and increases in FENZ levy operate in the same manner.

The Earthquake Commission Act 1993 is to be replaced by the Natural Hazard Insurance Act. The EQC Act, and how it affects the amount of EQCover available, can be difficult to interpret currently and these changes should enable better community recovery from natural hazards and clarify the role of the commission in the cover provided.  According to EQC, the Natural Hazard Insurance Bill 2022 is in the final stages of drafting. The public should have the ability to comment on the proposed bill once it has received the approval of cabinet. The Natural Hazards Insurance Bill was introduced on 16 March 2022. Once the bill has had its first reading, you can follow the bill’s progress on the Parliament website.

There is some valuable information from Vero in the YouTube video below.

Impacts of EQC Changes – YouTube