Your insurance company will continue to be there for you to settle your claim.

We recognise this is a very unsettling time with many big decisions on the horizon and you may not have all the answers.

Your insurance contractual rights under your claim are between you and your insurer. They are unaffected by what category your property has been placed in by your Council.

Your insurance policy pays for the physical damage to your house up to your Sum Insured or any other policy limits and benefits that may apply.  Whether you repair in situ, make improvements, or move to another property, your insurance monies can be put toward your recovery. Any entitlement under the EQC Act remains the same and your insurer will continue managing this alongside your other claim(s).

If your home is categorised by council as being in a:

• Category One area – there is no impact to your claim and you can proceed with repairing your home when you are ready. Insurance pays for the physical damage to your home from the event, up to the sum insured or any other policy limits and benefits that may apply.
• Category Two area – there will be no impact on your claim as your insurance policy covers you for physical damage under your policy. However, it may be prudent to fully understand what measures are required by councils to reduce risk and if any other financial assistance is available before proceeding to repair your home. This may include, for example, improving drainage or raising properties to limit the impact of flooding.   Your insurer will likely cash settle you for the physical damage from the event, up to your sum insured or any other policy limits and benefits that may apply.  Any intervention or improvements to manage future risk is not covered under your policy. 
  
  
• Category Three area – there is no impact to your claim and it can progress to be cash settled for the physical damage to your home from the event, up to the sum insured or any other policy limits and benefits that may apply. You may wish to defer undertaking repair work on your property until you fully understand what policy and funding support may be available to you, including any Council compensation should you choose to move to another location.   The details of what will happen to your claim in the event of any property buyout are still being worked through.

In all cases your insurance company will work with you and discuss the next steps for your claim.

As done following the Westport and Edgecumbe events, insurers will continue to support communities whilst wide scale interventions are worked through.

Should these works be deferred or be shown to have not sufficiently mitigated the risks, insurers may re-evaluate ongoing cover.

There could be a variety of approaches from insurers. Some will continue with existing terms, some may place more scrutiny on new customers than existing customers, and others, at renewal time, may be looked at on a case-by-case basis.  Depending on their assessment of risk, normal measures would be applied – e.g. price, excess, or exclusion of some hazards until preventative work has been completed by the relevant council(s).

We can’t comment on the individual situation of each homeowner, but your insurance company can have those discussions with you. Insurance is a competitive market and there is no standard approach across all companies.

In general terms, insurance will still be available in Hawke’s Bay, Auckland and Tairāwhiti following Cyclone Gabrielle and the Auckland Anniversary weekend events. 

Each company will look at a property on a case-by-case basis and even with the same information, they will take different positions depending on their own appetite for risk and the circumstances of the customer. Decisions by companies are not just taken at sign-up time but are continuously reviewed as new information comes to hand, with the obvious one being after a significant event, such as Cyclone Gabrielle and the Auckland Anniversary weekend events experienced recently.

In terms of future insurance availability, insurers make their decisions based on a variety of information, including: the questions asked during the sale/sign up process; information from councils and modelling companies on hazards such as flood and coastal inundation; data on past events and claims, frequency and when it happened; and what has been done to mitigate the risk of damage from future events.

Natural hazard risks are just one factor insurance companies take into account when deciding to offer cover and the terms and conditions to apply.  Insurers will also be looking at things like the age of the property, how well it is maintained, if wiring is up to date, for example. Depending on all of those inputs, insurers have a range of measures they can apply.  These may include premium loadings or increased excesses for certain hazards such as flooding.  Less common is excluding flood or declining cover all together.  Where an insurer has signalled the need to mitigate a hazard, for instance, the need to upgrade security they would exclude cover for burglary or theft until an alarm is installed.

Individuals, communities, local and central government need to focus on how to reduce risk.  Risk reduction can avoid or reduce the socio-economic impact or loss of amenity value that floods bring.  Transferring risk to insurance does not reduce the risk. 

Local Councils are only at the very beginning of their engagement on what community and property mitigation may be required.

If down the track, the Council changes its regulations regarding floor level heights then you may need to contact your insurer to discuss how this affects your claim.

Insurance is there to help with the cost of putting you back where you were, so for most your policy will not have cover for the cost of interventions or improvements you are required to make.

The cost of implementing any intervention or improvements to manage future risk is not covered under your policy, unless it is to property insured by the policy and is directly needed to repair or rebuild following physical damage.  Where covered, this would be within the sum insured or any other policy limits that may apply. As the majority of risk mitigation work will likely involve land (e.g., bunding) or involve lifting an undamaged or partially damaged home with no connection between the repair and the risk mitigation work required, these are not costs that would be covered. However, implementing such measures will improve insurance availability.  

For example, if you have had flood water through your home which requires replacing gib board and carpets then there would be no cover for lifting a home.

For example, the home needs to be rebuilt from scratch as it has suffered significant physical damage, there would potentially be cover for rebuilding to the new council mandated floor heights.

Home policies exclude any costs relating to land repair or costs associated with mitigation of potential physical damage to land.

Insurers did not make the decision about the category of the area your house is located in, insurers provided information to inform council decisions.  Insurers have not provided individual property level data to the Government or councils.   Categorisation decisions have been made by councils, not insurers.  Insurance companies (via an expert in flood hazard modelling) provided the Government Cyclone Recovery Taskforce with aggregated claims data for Auckland Anniversary Weekend and Cyclone Gabrielle overlaid with a flood model as one of many inputs to help inform council decisions.  Inputs from others included life risk assessments and the viability of mitigation solutions to reduce the risk which local government have relied on to make their decisions.

Contact your insurance company and give them the chance to put things right. 

You can also contact the New Zealand Claims Resolution Service who can provide free, independent expert advice and support homeowners to resolve residential insurance issues. This can include legal, engineering and wellbeing support.  

All ICNZ members comply with the Fair Insurance Code, which includes a free and independent dispute resolution service.  If you wish to make a complaint, the process is explained here.  Insurers belong to one of two approved dispute resolution schemes:

Financial Services Complaints Limited

Insurance and Financial Services Ombudsman.