Earthquake Commission - Who Pays

Who Pays

The cover is provided at the time the premium is paid to a commercial insurer. A disaster insurance premium is charged to the policyholder, up to a maximum of $207 NZD, which provides the holder with EQC's EQCover. This premium is placed into the Natural Disaster Fund.

EQCover entitles the holder to up to $100,000 NZD plus tax (GST) for each dwelling, with any further amount above that being paid by the policyholder's insurance company. For personal effects, EQC pays out the first $20,000 NZD plus tax. The EQC covers only domestic assets and does not provide cover for businesses.

The EQC levies policyholders to cover a major part of the earthquake risk. The EQC reduces its own risk by taking out cover with a number of large reinsurance companies, for example Munich Re. In 2006, the EQC took out reinsurance of $2.5 billion NZD with multiple reinsurance companies, numbering around 30.

There is a $1.5 billion NZD excess for each earthquake event. If the required EQC payout exceeds the total of the excess and reinsurance ($4 billion NZD) the remainder of the payout is met by the EQC up to the limit of the Natural Disaster Fund. If the payout exceeds those assets, a Crown Guarantee requires that the Government pay the remainder.