What does this mean?
Frequently asked questions
EQC has two sources of income — funds from premiums, and investment income from money held in the Natural Disaster Fund. The current EQC levy is below the long-term breakeven costs needed for running the scheme. EQC has had to meet the cost of settling claims for events including Canterbury and Kaikoura and therefore the Natural Disaster Fund needs to be built back up.
The levy is being increased by the minimum amount possible to put EQC on a more sustainable footing for the future.
The increase in your insurance premium will depend on the type and number of policies you hold, and this will be clearly outlined on your policy documents. We’ve summarised the impact the changes will have in a handy diagram.
The increase in Earthquake Commission Levy will take effect 1 November 2017, applying to new insurance policies as well as policies renewing after this date.
The Earthquake Commission Levy applies only to your Home and Contents insurance (including Landlord). Your Car policy, for example, will not be affected by this increase.
The NZ Government has increased the Fire Service Levy industry wide, so this will apply to all insurance companies and policies in New Zealand.
What you pay for your insurance depends on the type of policy you hold. For example, a Home insurance policy is made up of a base company premium with the addition of Goods and Services tax, fees that go to the Earthquake Commission, and levies imposed by the Government for fire services.
If you’re set up to pay for your policy by direct debit, you don’t need to pay the increase up front or in one go, this will be spread over your fortnightly or monthly instalment amounts.
If you’re concerned about the cost of your insurance, there are things you can do to keep this down – for example, removing optional benefits and/or opting for a higher excess will reduce your total premium. You’ll also pay less if you choose to pay annually.
AA Insurance has an obligation to protect our customers. Therefore, while we do offer flexibility and optional benefits surrounding accidental damage, we will not remove earthquake cover from your Home and Contents policies due to the extent of loss this can cause. Find out more about our policies.