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.
Read more about this topic: Earthquake Commission
Famous quotes containing the word pays:
“The discovery of the North Pole is one of those realities which could not be avoided. It is the wages which human perseverance pays itself when it thinks that something is taking too long. The world needed a discoverer of the North Pole, and in all areas of social activity, merit was less important here than opportunity.”
—Karl Kraus (1874–1936)
“When I censured a gentleman of my acquaintance for marrying a second time, as it shewed a disregard of his first wife, he said, “Not at all, Sir. On the contrary, were he not to marry again, it might be concluded that his first wife had given him a disgust to marriage; but by taking a second wife he pays the highest compliment to the first, by shewing that she made him so happy as a married man, that he wishes to be so a second time.””
—Samuel Johnson (1709–1784)