Home insurance: what to expect when you make a claim after a natural disaster

What happens when you make a home insurance claim after a natural disaster? After the Kaikoura earthquake in 2016, the Insurance Council of NZ – Te Kāhui Inihua o Aotearoa (ICNZ) and several New Zealand insurers worked together to create a new model for managing natural disaster claims. The National Disaster Response Model (NDRM) is a partnership between the Earthquake Commission (Toka Tū Ake EQC) and a number of private insurers in New Zealand, created to simplify and speed up the claims process. We’ve outlined each step of a claim that includes EQCover so you know what to expect if you need to make a claim after a natural disaster.

Home insurance is designed to cover your property, giving you peace of mind should the unexpected happen. If you home is damaged by a natural disaster, a portion of your claim will be covered by Toka Tū Ake EQC. EQCover covers damage to your home caused by an earthquake, landslip, volcano, tsunami, and hydrothermal activity as well as fire resulting from any of these.

EQCover also provides cover for damage to your land caused by natural disasters (earthquake, natural landslip, volcanic eruption, tsunami, and hydrothermal activity) and for land damage from storms and floods.

If your home is damaged during a storm or flood, this will be covered by your private home insurance, subject to the term of the policy. You can find out more about how your storm or flood damage claim might be managed on our blog.

How do I get covered by EQCover?

If you have private home insurance, you’ll automatically pay the Toka Tū Ake EQC levy as part of your insurance premium and, therefore, gain EQCover in the event of a natural disaster.

If, like AA Insurance, your insurance provider is part of the partnership with Toka Tū Ake EQC, your claim will be managed by your insurer on behalf of Toka Tū Ake EQC. They will assess, manage and settle your entire claim – including the EQCover portion of it – on behalf of Toka Tū Ake EQC and be your point of contact during the entire claims process.

What to do after an event

1. Assess the situation: stay calm and make sure you and everyone else at the scene are out of danger. Only return home if it’s safe to do so. Take care of your safety first, then, if you can do it safely, check to see what damage has occurred.

2. In case of emergency: if you need emergency accommodation, please call us on 0800 500 216. If you need to make a claim, the fastest way you can do that is claim online at aainsurance.co.nz/claims.

The claims journey

Home insurance claims can be complex, particularly after a natural disaster. Due to the nature of EQCover claims, they can take longer to complete than other types of claims. The claims journey detailed below is an indication of how your home claim may be handled if you are a customer with us, but please bear in mind that each claim is unique.

1. Once you lodge your claim, you’ll be given a claim number. If you made your claim online, we’ll get in touch with you and take you through the next steps in the claims process. If you made your claim over the phone, you’ll be taken through the next steps on the call. A Customer Manager will be appointed to your claim and keep you informed throughout the process.

2. If your home becomes uninhabitable as a result of an event covered by your policy, we’ll cover the reasonable costs of temporary accommodation for you, your family and even your domestic pets while your home is being assessed, repaired or rebuilt, subject to the limits of your policy. Find out more in the ‘Standard benefits – cover automatically included’ section of your policy document.

3. Provided it’s safe to access your home, your Customer Manager will arrange for an assessor to visit your property and complete an initial assessment of the damage. Once this is done, they’ll provide us with an assessment report which will outline the damage and may help to arrange other experts as required.

4. If your property has suffered land damage, we may arrange a visit from a geotechnical engineer if the damage falls within the EQCover limits. Once this is done, they’ll provide us with an engineering report which will be used for the purpose of settling your claim. A registered valuer may also be appointed to determine the value of the land damaged by the natural disaster.

5. Once we have completed all assessments and reviewed any required reports and determined your EQCover claim settlement entitlement, we’ll be in touch to discuss the outcome. It’s important to note that any cover for land will be provided by Toka Tū Ake EQC; your insurance provider will be acting on their behalf.

How will my claim be settled?

EQCover claims are generally cash settled. EQCover provides a maximum cover for residential buildings of $345,000 (incl GST), which increased from $172,500 as of 1 October 2022. Toka Tū Ake EQC will pay up to this amount towards the cost of repairing or rebuilding your home. If the repair or rebuild costs exceed the Toka Tū Ake EQC building cap, your Home or Landlord Insurance Policy will then top this amount up, to a maximum of your sum insured depending on the result of the assessments.

That’s why it’s very important that you regularly review and update your sum insured so that, when it comes to claim time, we can help put you in the same position you were in prior to the event. Your sum insured is the maximum amount that we will pay to rebuild your home after a natural disaster. There are several ways you can calculate your sum insured, including contacting an expert such as a builder, architect or quantity surveyor. Alternatively, you can use the online Cordell Sum Sure Calculator which estimates typical building costs for standard residential houses.

EQCover also provides cover for your land within certain limits and conditions. It's important to note that not all land is covered - find out more about the residential land that is covered on Toka Tū Ake EQC’s website.

The settlement amount for your EQCover land claim will either be the lower of:

• the market value of the relevant area of land plus the indemnity value of any covered damaged land structures; or

• the repair or reinstatement cost of the covered damaged land area plus the repair or reinstatement cost of any covered damaged land structures.

What excesses apply in an EQCover claim?

An excess is the amount you pay when you make a claim on your insurance policy.

The Toka Tū Ake EQC excess for EQCover claims is a percentage based on the settlement or payment amount you receive for your EQCover claim:

• Dwelling claim – 1% of the payment up to cap, with a minimum of $200 and a maximum excess of $3,450 (incl GST).

• Land claim – 10% of the land settlement amount with a minimum of $500 and a maximum of $5,000.

If you are also claiming under your AAI Home or Landlord Insurance Policy, in certain circumstances, you may also be required to pay a natural disaster excess. This excess applies to items or property that have been damaged by a natural disaster but are not covered by the Toka Tū Ake EQC. For example, driveways, fences and swimming pools are not covered by Toka Tū Ake EQC but are covered under your Home Insurance policy. You can find out more about the natural disaster excess on our website.

When should I make a claim?

The sooner you get in touch, the sooner your insurer can help. Your insurance provider may need your policy number or personal details to locate your relevant policy. If you’re insured with us, start your claim online or give us a call on 0800 500 216 when you’re ready.

I’ve made a claim. What’s next?

In a large-scale event, all claims where immediate help is required, such as emergency accommodation, are prioritised. When you lodge your claim, we’ll ask you for any additional information we may need to progress your claim and take you through the next steps. Once you’ve lodged a claim, there’s nothing more you need to do.

In some large-scale events, claims for certain types of damage or replacements for certain items could take longer than expected.

Want to learn more?

If you’re looking for further information about our claims process or would like to find out more on simplifying insurance, check out our other blogs.

• Home insurance: what to expect at claim time

• Home insurance: what to expect when you make a claim after a storm or flood

• Contents insurance: what to expect at claim time

• Car insurance: what to expect at claim time