News and Publications

Property Matters - 28 June 2017

Fire Service Levies

The Fire Service Act 1975 has now been repealed and replaced by the Fire and Emergency New Zealand (FENZ) Act 2017, with the following consequences.

From 1 July 2017, there will be a significant 39.5% increase in Fire Service Levies, increasing from 7.60 cents to 10.60 cents per $100 of the indemnity value of the insured assets.  For residential property, the indemnity value will remain capped at $100,000 for buildings and $20,000 for contents.  For non-residential property, there is no cap.

From no earlier than 1 July 2018 and no later than 1 July 2019, the new FENZ levy, including the revised basis of calculation, will come into force.  From this date, the FENZ levy will be calculated based on the amount insured contained in the insurance policy or, if not stated, from the declared value.  The declared value may be set out in a statement by or on behalf of the policyholder, or by a valuation certificate from a qualified person.  Penalties can be applied under FENZ if the declared value is not considered to be fair and reasonable.

In summary, therefore:

  • Fire service levies will be increasing with effect from 1 July 2017, but will continue the current basis of percentage of indemnity value.
  • From 1 July 2018 or later, a revised basis of calculation will see the levy calculated based on the amount insured, being the total sum insured stated under the policy.
  • If there is no total sum insured, as in the case of some residential replacement policies, the policyholder will be required to certify a declared value.
  • There are potential penalties for under-stating the declared value.

Duke and Cooke valuers regularly undertake valuations for replacement cost insurance purposes for residential and commercial properties, giving property owners the confidence of knowing they have adequate cover in the case of a claim and will not be caught out under the new FENZ levy regime.  If uncertain, give us a call to discuss your situation.

Click here for more information regarding replacement insurance on your residential property.

EQC cap rise and insurers as agents

Insurers may soon act as agents for all Earthquake Commission (EQC) claims and the body's claim cap may increase to $150,000, but not include household contents.

On Monday the Government announced these proposed changes to the EQC Act. EQC acts as a Government-owned insurance company for natural disasters, automatically covering all residential properties with private insurance policies that include fire damage cover.

The changes would mean people with homes damaged in natural disasters claim through their insurer rather than directly to EQC. It would be much like the trial that has been running with all November earthquake house claims.

Claimants would then only have to deal with one organisation about their claims.

It would also mean EQC's natural-disaster claim cap would be raised from $100,000 to $150,000 and cover for household contents would be ditched.

Insurance Council chief executive Tim Grafton said private insurers supported the proposed reform, but wanted "a clear expectation" that insurers should be responsible for assessing and managing claims for house damage.

Last year EQC and insurance firms signed a memorandum of understanding that allowed insurers to act as EQC's agents assessing and settling all house claims from the November quake.

PROPOSED CHANGES TO EQC ACT

  • EQC claim cap raised from $100,000 to $150,000.
  • EQC will no longer cover contents.
  • Claim excess standardised to $1000.
  • Claimants to lodge claims with insurance company, not EQC.
  • EQC to cover natural disaster land damage only when it directly affects the residence or access to it.

Read the full story here.

But what does this mean?

Duke & Cooke believe the proposed changes to the EQC Act should make it easier for future insurance claims.  The proposed changes would mean policyholders making a claim resulting from a natural disaster would claim through their insurance company rather than dealing directly with EQC.  This should simplify the process.