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Payments more than cap

Information for customers who may receive a total amount from EQC that is more than the per event cap

Under the Earthquake Commission Act 1993, EQC provides cover for damage to a residential building up to the cap for each natural disaster event (usually $100,000 plus GST).

In some circumstances, a customer may have received more than $100,000 plus GST in total from EQC. But this does not mean that the amount of the insurance we paid in settlement of their residential building claim(s) exceeded our per event cap.

The scenarios under which a customer may receive an amount in total from EQC that is more than $100,000 plus GST include the following:

EQC is reimbursed by the private insurer for the cost of repairs exceeding the cap

In this scenario, the repairs were being carried out as part of the Canterbury Home Repair Programme (CHRP) and were underway before it was determined that the cost of the repair would exceed the cap.

A protocol between EQC and private insurers allowed EQC to complete the repair that was initially thought to be under cap, but which went over cap during the repair process. Under the protocol, to ensure no disruption to the customer, EQC continued the repair work for the customer and recovered the costs incurred above the cap from the private insurer. So in effect, the private insurer (not EQC) ended up paying for the overcap amount.

The cost of previous defective repairs that were carried out (and need to be redone) does not count towards the cap

Where the workmanship on the first time repair doesn’t meet the required standard, we don’t count the cost of any below standard work (that does not repair damage) in calculating whether the EQC cap has been reached. This means that we may actually end up paying (in total) more than $100,000 (plus GST) by the time the repair is redone.

Total repair costs across multiple events exceed the amount of a cap for a single event - but repair costs for each event are less than the per event cap

If a residential building has suffered damage from more than one earthquake event, EQC has to determine how much damage was caused by each individual event. This is because EQC cover begins afresh after each event and up to the EQC cap for each.

Where damage is the direct result of several events, EQC can end up paying more than the amount of a single EQC cap, because of the cumulative cost of the repair of the damage across several events.

For example, two claims are lodged for two separate earthquake events, one with a cost of damage of $40k (plus GST) and the other with a cost of damage of $80k (plus GST). The total cost of the damage for the two events is $120k (plus GST), which is more than the cap for a single event. But in this example, there are two events – and the cost of the damage for each event does not exceed the cap for that single event.

Additional payments may have been made, such as reimbursement of expert fees, that do not count towards the cap

Sometimes professional fees are incurred by customers which help ascertain the cause and extent of the natural disaster damage, identify repair strategies, and help quantify the amount of the damage to a residential building. EQC may in certain circumstances reimburse a customer for the fees they incur in engaging consultants (e.g. assessors, estimators, surveyors, valuers, engineers) for this purpose.

This reimbursement is a separate amount that is not part of the insurance cover provided under the EQC Act.  It is therefore not added in calculating whether the EQC cap has been reached. Accordingly, the customer’s settlement amount for the repair cost plus this reimbursement amount may in total exceed the cap amount.

You can find further information in our Costs that contribute to cap factsheet

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