EQC Explained: How NHC Natural Disaster Cover Works

What is NHC (Formerly EQC)?

Natural Hazards Commission Toka Tū Ake (NHC, formerly EQC) is the New Zealand government entity that provides natural disaster cover for residential property. It operated as the Earthquake Commission (EQC) under the Earthquake Commission Act 1993 until 1 July 2024, when the Natural Hazards Insurance Act 2023 came into force and the organisation became the Natural Hazards Commission. The cover it provides is now called NHCover (previously EQCover).

NHCover is automatic. If you have private house insurance, your building is also covered by NHC for natural disaster damage. You do not buy NHCover separately.

The NHC levy is collected by your private insurer and passed on to NHC. The levy is 16 cents per $100 of building cover, up to the $300,000 + GST cap, so the maximum levy is $480 + GST per year.

What Does NHCover Cover?

NHC covers damage to residential buildings and some surrounding land caused by specific natural hazards. The covered events are:

• Earthquake - Including earthquake-related damage such as shaking, liquefaction, and lateral spread
• Natural landslip - Land movement caused by natural events (not human activity)
• Volcanic eruption - Including lava flow, ashfall, and volcanic gases
• Hydrothermal activity - Geothermal events such as hot springs or geysers
• Tsunami - Sea waves caused by underwater earthquakes or volcanic activity

NHCover Limits

NHCover has defined limits. Where damage costs more than the cap, your private insurer covers the amount above it, provided your sum insured is high enough.

For most homes the $300,000 + GST cap will not meet the full cost of a major rebuild. Your private insurer handles costs above it, which is why your sum insured needs to be accurate.

The Insurance Council of New Zealand (ICNZ) publishes further information on how private insurance and NHCover work together.

How NHCover Works With Your Private Insurer

Since 1 July 2024, under the Natural Hazards Insurance Act 2023, your private insurer manages natural disaster claims including the NHCover portion. You deal with one point of contact rather than lodging separately with NHC.

Your private insurer will:

This model was introduced to streamline claims handling after the difficulties experienced during the Canterbury earthquakes, when homeowners often had to deal with both EQC and their insurer separately.

• Receive and assess your claim
• Determine what falls under NHCover (within the cap) and what falls under your private policy (above the cap)
• Manage repairs and payments on behalf of NHC for the NHCover portion
• Handle the private insurance portion for any costs above the cap

Making an NHCover Natural Disaster Claim

If your property is damaged by a natural disaster, follow these steps:

• Ensure safety - Make sure everyone is safe. Follow Civil Defence instructions and do not enter damaged buildings until they have been assessed.
• Document the damage - Take photos and videos of all damage as soon as it is safe to do so.
• Contact your insurer - Call your private insurer's claims line. They will lodge the claim and manage the process. Major insurers like AA Insurance, Tower, and State all have dedicated natural disaster claims processes.
• Temporary repairs - You can make urgent temporary repairs to prevent further damage (e.g. tarping a damaged roof). Keep receipts for any costs.
• Assessment - Your insurer will arrange for the damage to be assessed. This may involve engineers or building assessors for significant damage.
• Settlement - The NHCover portion is settled by your insurer on behalf of NHC. Costs above the cap are settled under your private policy.

Recent Changes to NHCover

Natural disaster cover in New Zealand has changed substantially in recent years:

The building cap rose from $150,000 + GST to $300,000 + GST on 1 October 2022, and the maximum levy became $480 + GST per year.

Contents cover was removed on 1 July 2019. Household contents are now covered entirely by private contents insurance.

On 1 July 2024 the Natural Hazards Insurance Act 2023 replaced the Earthquake Commission Act 1993. EQC became the Natural Hazards Commission Toka Tū Ake, EQCover became NHCover, and a $500 excess per insured home was introduced for building claims. For the latest details, see the NHC website.