EQC and Insurers seeking clarity on insurance payments

EQC and Insurers seeking clarity on insurance payments

The Earthquake Commission (EQC) and the Insurance Council have agreed to ask the High Court to make a ruling on complex questions of coverage arising from the two major Canterbury earthquakes and their aftershocks, EQC Chief Executive Ian Simpson and Insurance Council CEO Chris Ryan said today.

The EQC and the Insurance Council have been working hard together on this issue for several weeks and believe a joint move is the best way for the EQC and the industry to get certainty.

They will lodge papers with the Wellington High Court seeking a declaratory judgement on how to apply the Earthquake Commission Act 1993 in the unusual circumstances generated by two major earthquakes in almost the same location over a matter of months.

"EQC and the insurers want to get certainty on this difficult issue as soon as possible to ensure the smooth running of the claims settlement process," Mr Simpson said.

"We will welcome the clarity that the Court decision will bring," Mr Simpson said. "The important point is that we all agree on is that it shouldn't affect payments to people who have suffered losses. It's really about how much cover EQC is allowed to provide in these unusual circumstances"

Insurance Council of New Zealand Chief Executive Chris Ryan said that the issue was one that insurers and the EQC had been discussing together, but was complex and it had been agreed that the best way forward was to get a clear ruling through the courts.

"This is to ensure early clarity as to who pays what, and we support this joint approach," Mr Ryan said.

Under the Act, EQC provides cover for damage to residential properties and contents from earthquakes and certain other natural disasters up to a maximum of $100,000 (plus GST) for properties and $20,000 (plus GST) for contents, along with defined coverage for damage to residential land. The claimants' insurers provide coverage for amounts above the EQC's limits.

The issue that EQC and the insurers want to clarify is in what circumstances the EQC insurance will be reinstated back to its full limits after natural disaster damage has happened.

In the majority of cases it is clear that full cover has been reinstated. But in a small number of situations it is uncertain whether EQC insurance will provide a further $100,000 of cover for the second event.

EQC and the insurers will be asking the High Court to deliver its decision as soon as it can.

"It's important to have certainty about how EQC insurance applies in these circumstances," Mr Simpson said. "This certainty will help EQC and the insurers continue to process insurance claims as quickly as they can."

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