You could potentially still have EQC cover on an “as is where is” house.

In Christchurch there are a number of people who have purchased an “as is where is” property, being an unrepaired earthquake damaged property. A lot of these properties cannot be insured for further earthquake damage, and are at risk should a further earthquake event occur in Canterbury.

However, it may be possible to insure these properties with the inclusion of an earthquake exclusion clause (this will obviously depend on the property and the level of damage and advice would be required from an insurance professional). If the property can be insured with an earthquake exclusion, it is likely that there will still be EQC cover for the dwelling up to the maximum of $115,000 (including GST) if there was another earthquake. This may seem strange, but it is because of the specific wording of the Earthquake Commission Act.

The Act that Governs EQC, the Earthquake Commission Act 1993, provides that a person has EQC cover for natural disaster damage for their residential building if they have a valid contract of fire insurance for the period of time that the fire insurance policy is in place (s18). A contract of fire insurance is defined as:

a contract whereby any property is insured against physical loss or damageby fire (other than natural disaster fire), whether the contract includes other risks or not; but does not include any contract of marine insurance or any contract of reinsurance. (s2)

Therefore, a fire insurance policy on an “as is where is” property with an earthquake exclusion, would still be sufficient to qualify the property for EQC cover up to the $115,000 cap. This may be beneficial if further Earthquakes strike the Canterbury region.

While there would be cover for the dwelling, Land damage may not be covered as the section covering land damage (s19) requires the dwelling to be insured for Natural disaster damage, and this may not be covered because of earthquake exclusion. However, we recommend anyone in this situation seek expert advice.

We record that the above information may depend on the contract wording, and recommend that you seek legal or the other necessary professional advice if you are in that situation or before you enter into any insurance policies/contracts.