Only 1/3 Homeowners Confidently Understand Their Insurance - NHC Urging People To ‘Know Your Cover’

New research from the Natural Hazards Commission Toka Tū Ake reveals many New Zealand homeowners don’t fully understand what their natural hazards insurance would cover after an event. Now, the organisation is urging homeowners to get to know their cover - before they need it.

A NielsenIQ report has found that only a third (33%) of insured homeowners are confident they know what damage to their home would or would not be covered by insurance after a natural hazard event. Even fewer (26%) were confident they understood what would be covered for damage to their land.

“We know people don’t always have information on what they are covered for front of mind. Life is busy and we often juggle information overload, but it can cause confusion and frustration after a disaster if homeowners don’t know what they are protected for, especially if people find they don’t have the cover they thought they did,” says Tina Mitchell, Natural Hazards Commission Chief Executive.

“As New Zealanders, we live in a country that is particularly prone to natural hazards, including landslides and floods, earthquakes, and volcanic activity.

Understanding your risk and your insurance cover are critical to looking after your home and family. We are urging people to understand how their insurance covers them now, before they need it,” she says.

The Natural Hazards Commission provides a first layer of insurance for natural hazards damage to insured residential homes and some land. Everyone with a home insurance policy pays a levy into a fund that provides a contribution towards repairs if your insured property is damaged by a natural hazard.

The scheme covers damage up to $300,000 for your home and holiday home, and some limited cover for land, when the damage is caused by certain natural hazards.

Additional cover for your house is then determined by your private insurance policy, but there is no other cover available for your land.

“New Zealand is one of the only countries in the world where homeowners can get financial support for damage to land, through the natural hazards insurance scheme. We’re really lucky to have it, but it has limits and is usually only a contribution to repairs,” says Mitchell.

Mitchell says the limits are set by legislation, and outline the area that can be covered, and the limits to the amount that can be paid out. They are designed to ensure that every homeowner across the country gets access to some protection, even though it is only likely to be a contribution to the actual costs of repair.

“It is important to know what you are covered for, and where those limits are, so you can take practical steps to strengthen your property before disasters occur. For example, strengthening retaining walls and considering how waterways might impact your property are good things to check regularly. The scheme is there to help with a financial contribution, but the statutory limits mean it may not cover all of the damage.”

“And if a natural hazards event does occur, call your insurer to make a claim. They manage all insurance claims following a natural disaster, including Natural Hazards Cover.”

Our ‘know your cover’ checklist: five things you can do:

• Regularly check your private insurance policy to consider whether you are comfortable with the level of cover you have in place
• Understand which areas of your land might not be covered by natural hazards cover
• Learn about the risks to your property, and how the land around you might be affected
• Seek expert advice about how to reduce your risks from builders, engineers, or our website
• Plan for how you'd manage after an event; insurance claims and rebuilding takes time

About the Natural Hazards Commission

The Natural Hazards Commission Toka Tū Ake exists to help New Zealanders prepare for and recover from the impact of natural hazards. One of the ways we do this is by providing natural hazards insurance for homes and residential land.

Homeowners have access to our scheme if they have an insurance policy with fire cover. The premium paid to insurers includes a Natural Hazards Insurance Levy, which is the amount homeowners pay for this cover. The levy is currently up to $480 plus GST / year and provides the first $300,000 towards natural hazards damage to your home, and some extra cover for your land.

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