Natural Hazards Insurance Act 2023

1: Title
This Act is the Natural Hazards Insurance Act 2023.
2: Commencement
This Act commences on the later of—
a: 1 July 2024; and
b: 12 months after Royal assent.
1: Preliminary provisions
3: Purposes of Act
The purposes of this Act are—
a: to reduce the impact of natural hazards on people, property, and the community by—
i: providing for first loss insurance for residential buildings and residential land against damage that is a direct result of natural hazards for the purposes set out in section 4
ii: contributing to improving awareness and understanding of matters relating to natural hazards; and
iii: contributing to improved natural hazard risk management; and
iv: contributing to improved readiness for, resilience to, and recovery from natural hazards; and
v: encouraging the availability and uptake of catastrophe insurance for residential buildings; and
b: to contribute to the management of the financial risk to the Crown of providing natural hazard cover by—
i: continuing the Fund and providing for its management; and
ii: imposing a levy to contribute to the cost of providing natural hazard cover; and
iii: providing for arranging reinsurance and other risk transfer products in respect of natural hazard cover; and
c: to enable the Commission to facilitate the Crown arranging reinsurance or other risk transfer products in respect of Crown risks beyond those covered in this Act.
4: Purposes of natural hazard cover
1: The primary purpose of natural hazard cover is to contribute to the replacement or reinstatement of dwellings that suffer natural hazard damage.
2: Natural hazard cover extends beyond a dwelling to certain other parts of the building where the dwelling is located, other structures, and infrastructure ( see section 30 sections 6 15
3: Natural hazard cover also extends to the land on which the building is situated and certain surrounding land, and retaining walls, bridges, and culverts ( see section 38 sections 16 19
4: Natural hazard cover provides cover for—
a: damage to residential buildings that is a direct result of an earthquake, hydrothermal activity, a landslide, a tsunami, or volcanic activity or a fire that is a consequence of any of those hazards; and
b: damage to residential land that is a direct result of any of those hazards or a storm or a flood, or a fire that is a consequence of a storm or flood.
5: Interpretation
1: In this Act, unless the context otherwise requires,— appurtenant structure section 11 see sections 13 14 arrange assessed market value sections 44 46 authorised person section 143 section 144 146 147 149 bridge or culvert section 18 building claim entitlement section 31 building cover subpart 2 capital expenditure section 2(1) claim section 52 claim handling costs claim settlement costs section 61 section 81 Code section 89 Commission section 125 Commission’s website common land section 19 common ownership interest section 20 common property section 13 complaint procedure section 91 diminution of value sections 42 46 dispute scheme section 101 dwelling section 6 earthquake eligible building section 7 excluded property Schedule 2 expenses section 2(1) financial settings section 134 fire insurance contract section 21 fire insurer section 21 flood floor area Fund section 108 funding and risk management statement section 136 GST Goods and Services Tax Act 1985 hydrothermal activity imminent damage section 24(3) insured person section 22 insured person’s land section 16 joint land section 19 joint ownership interest section 20 joint property section 14 land land claim entitlement section 39 land cover subpart 3 landslide see section 23(2) levy section 116 levy settings section 134 Minister mixed-use building section 8 natural hazard section 23 natural hazard cover Part 2 natural hazard damage section 24 natural hazard fire referable decision section 104 regulations section 159 reinstatement cost sections 41 46 replacement cost sections 32 33 residential building section 9 residential land section 17 residential percentage section 8 retaining wall section 18 review procedure section 92 reviewer section 98 service infrastructure section 12 see section 13 14 shared land section 19 shared ownership interest section 20 shared property section 15 storm tsunami undepreciated value sections 45 46 volcanic activity
2: In this Act, a reference to a distance in metres means that distance measured in a horizontal line. Dwelling, residential building, residential land, and related terms
6: Dwelling
1: A building, or part of a building, is a dwelling
a: it is self-contained with the facilities necessary for day-to-day living on an indefinite basis (including somewhere to cook, sleep, live, wash, and use a toilet); and
b: 1 or more of the following apply to it:
i: it is used by 1 or more persons to live in as their home:
ii: it is used by 1 or more persons as their holiday home:
iii: it is capable of being, and is intended by its owner to be, used for a purpose set out in subparagraph (i) or (ii).
2: A building, or part of a building, is also a dwelling
3: A building, or part of a building, that meets the criteria in subsection (1) or (2) is a dwelling even if it is used some of the time to provide temporary or transient accommodation. Temporarily ceasing to meet criteria
4: A building, or part of a building, that met the criteria in subsection (1) or (2) but temporarily ceases to do so, remains a dwelling if—
a: the cessation is because of—
i: building work (as defined in section 7
ii: physical loss or damage to the building or part of the building as a result of a natural hazard or a sudden and unexpected event that is not a natural hazard; and
b: the owner intends that the building, or part of the building,—
i: will again meet those criteria; and
ii: will not be used for any other purpose before then. Examples
Example 1 If a person is renovating their house and the work involves stripping out the kitchen and bathroom and replacing them, the house would probably not meet the criteria in subsection (1)﻿(a) while that work was being done. However, it would still qualify as a dwelling under subsection (4). Example 2 If a person knocks down their house to build a new one, subsection (4) would not apply to the new house while it is under construction because it is not the same building as the one that previously met the criteria in subsection (1). Some facilities in separate building
5: A building, or part of a building, may meet the criteria in subsection (1)﻿(a) even if some of the facilities referred to in that paragraph are in an appurtenant structure, provided that they are for the exclusive use of the owners or other occupants of the dwelling. Example
A holiday home whose toilet is in an outhouse may be a dwelling. A holiday home that is a cabin in a campground, where the occupants rely on a toilet in a shared ablution block, would not be a dwelling. Dwelling that is not a building
6: If a vehicle (including a motor vehicle, trailer, boat, or aircraft) or structure (or part of a vehicle or structure) that is not ordinarily considered to be a building is immovable,—
a: it is taken to be a building (or part of a building); and
b: is a dwelling Example
A caravan that is permanently fixed to piles and is connected to power, water, and sewerage services, and that is being used on an indefinite basis as a person’s home, may be a dwelling. Large-scale accommodation
7: A building, or part of a building, is not a dwelling under subsection (1) (even if it meets the criteria in that subsection) if—
a: it is used to provide accommodation on a scale larger than is typical for use as the home of a single household; and
b: it is not intended by the owner to be used as the home of a single household. Examples
Example 1 A university or boarding school hostel that accommodates 100 people in dormitories with communal living and dining areas is on a scale larger than a typical family home, so is unlikely to be a dwelling. Example 2 A large family home that is the home for a single household would be a dwelling even if it has extensive facilities for visitors. Example 3 A house where occupants rent an individual room and share communal facilities is also likely to be a dwelling because it is on the scale of a single household home even though it is not currently being used as such. Excluded property
8: Property that would otherwise be part of a dwelling is not part of a dwelling if it is excluded property. Clarifying uncertainty
9: However, if the regulations state that buildings, vehicles, or structures (or parts of them) of a particular class are or are not dwellings, a building, vehicle, or structure in that class is, or is not, a dwelling (as the case may be).
10: The Minister must not recommend the making of those regulations unless satisfied that doubt has arisen about whether that class of buildings, vehicles, or structures are dwellings and that it is desirable for regulations to clarify the matter.
11: To avoid doubt, a building, or part of a building, is not a home or holiday home (and is therefore not a dwelling under subsection (1)) if—
a: it is used to provide temporary or transient accommodation, being accommodation that is ordinarily provided for periods of less than 28 days at a time (such as a hotel or motel); or
b: it provides accommodation for persons who are not living there voluntarily (such as a prison); or
c: it is used primarily for a purpose other than accommodation (such as a hospital or an emergency care facility).
7: Eligible building
1: If—
a: a building contains 1 or more dwellings; and
b: the whole building is insured under a single fire insurance contract; and
c: the person who is, or persons who are, entitled to the benefit of the fire insurance contract has, or have between them, an insurable interest in the whole of the building,— the whole building is an eligible building
2: If—
a: a building contains 1 or more dwellings; and
b: a person has, or 2 or more persons have between them, an insurable interest in part of the building, including at least 1 dwelling; and
c: those persons are entitled to the benefit of a single fire insurance contract that insures that part of the building,— that part of the building is an eligible building Examples
Example 1 If a building consists of 4 town houses, of which 3 are insured under separate fire insurance contracts and the fourth is not insured, each of the 3 insured town houses is a separate eligible building but the fourth is not an eligible building. Example 2 If the whole of a building consisting of apartments and shops is insured under a single fire insurance contract, the whole building is an eligible building. Depending on how much of the building is taken up by the apartments, the eligible building may also be a mixed-use building ( see section 8
8: Mixed-use building
1: An eligible building is a mixed-use building
2: An eligible building’s residential percentage r = [(d + a + j) ÷ b] × 100 where— r is the eligible building’s residential percentage d is the floor area of the dwellings in the eligible building a is the floor area of all appurtenant structures for the dwellings that are part of the eligible building j is the floor area of all appurtenant structures for any joint-owner premises (as defined in section 14(4) b is the floor area of the whole of the eligible building, excluding any common property.
3: For the purposes of determining whether an eligible building is a mixed-use building, sections 13 14 Guidance note
Common property is not included in calculating the building’s residential percentage, but it is part of the residential building, so is covered by natural hazard cover to the extent of the dwelling-owners’ interests in it ( see section 33
9: Residential building
1: A residential building
a: the whole of an eligible building, other than any excluded property; and
b: any other appurtenant structures and service infrastructure for the dwellings in the building.
2: However, in the case of a mixed-use building, residential building
a: all of the dwellings in the eligible building; and
b: all appurtenant structures and service infrastructure for those dwellings; and
c: all the common property and joint property for the building.
3: A residential building—
a: includes fixtures and fittings (such as built-in cupboards, plumbed-in appliances, wired-in electrical appliances, and fixed carpets), unless they are excluded property; but
b: does not include building contents or other personal property (such as curtains and blinds).
10: Number of dwellings
For the purposes of this Act, the number of dwellings in a residential building is—
a: the number of dwellings in the eligible building that were disclosed to the fire insurer when the fire insurance contract was entered into as dwellings to be insured under the contract; or
b: if no number was disclosed, 1.
11: Appurtenant structure
1: Property is an appurtenant structure
a: the property—
i: is part of the eligible building but is not part of the dwelling; or
ii: is, or is part of, a separate building or another immovable structure (such as a garage or garden shed); and
b: the property is appurtenant to the dwelling; and
c: the property is used—
i: by the owners or other occupants of the dwelling for household purposes (such as for parking or storage) or for access to the dwelling; or
ii: to house service infrastructure for the dwelling (such as a shed housing a pump that supplies drinking water to a house).
2: However, property is not an appurtenant structure if—
a: it is excluded property; or
b: it is common property or joint property; or
c: the insured person for the dwelling does not have an insurable interest in the property.
12: Service infrastructure
1: Property is service infrastructure
a: the infrastructure—
i: provides a service to the dwelling or an appurtenant structure for the dwelling that is part of the eligible building; and
ii: is in, or within 60 metres of, the eligible building; or
b: the infrastructure—
i: provides a service to any other appurtenant structure for the dwelling; and
ii: is in, or within 60 metres of, the appurtenant structure; or
c: the infrastructure—
i: provides a service to the insured person’s land; and
ii: is in, or within 60 metres of, the eligible building or an appurtenant structure for the dwelling.
2: However, property is not service infrastructure for a dwelling if—
a: it is excluded property; or
b: it is common property or joint property; or
c: the insured person for the dwelling does not have an insurable interest in the property.
3: In this section,— infrastructure
a: pipes, cables, wires, poles, and drains; and
b: water tanks, water towers, septic tanks, and tanks for storage of other liquids or gas (such as fuel for heating); and
c: equipment and machinery (such as a pump, switchboard, or heating unit) service
13: Common property
1: If an eligible building is a mixed-use building, the residential building may include common property. (There is no common property for a building that is not a mixed-use building.)
2: Part of the residential building is common property
a: that part of the building is available for use by, or is for the benefit of, the owners or other occupants of all the premises in the eligible building; and
b: any of the following subparagraphs (i) to (iv) apply to it:
i: it is an integral component of the eligible building (such as the roof and foundations); or
ii: it is an appurtenant structure for the premises under subsection (4); or
iii: it is service infrastructure for the premises under subsection (5); or
iv: it is an area in the eligible building that is not part of any of the premises in the building (such as a foyer).
3: However, part of the building is not common property if—
a: it is excluded property; or
b: the owners of any of the premises in the building do not have an insurable interest in that part of the building.
4: Property is an appurtenant structure for the premises
a: the property—
i: is part of the eligible building but is not part of a dwelling; or
ii: is, or is part of, a separate building or another immovable structure; and
b: the property is appurtenant to all the premises in the eligible building; and
c: the property is used—
i: by the owners or other occupants of the dwellings for household purposes (such as for parking, storage, or recreation) or for access to the dwellings; or
ii: to house service infrastructure for the premises.
5: Property is service infrastructure for the premises
a: the infrastructure—
i: provides a service to all the premises in the eligible building; and
ii: is in, or within 60 metres of, the eligible building; or
b: the infrastructure—
i: provides a service to an appurtenant structure for the premises or other common property that is part of the eligible building; and
ii: is in, or within 60 metres of, the eligible building; or
c: the infrastructure—
i: provides a service to any other appurtenant structure for the premises; and
ii: is in, or within 60 metres of, the appurtenant structure; or
d: the infrastructure—
i: provides a service to common land for the eligible building; and
ii: is in, or within 60 metres of, the eligible building or an appurtenant structure for the premises.
6: In subsection (5), infrastructure service section 12
14: Joint property
1: If an eligible building is a mixed-use building, the residential building may include joint property. (There is no joint property for a building that is not a mixed-use building.)
2: Part of the residential building is joint property
a: that part of the building is available for use by, or is for the benefit of, the owners or other occupants of some but not all premises in the eligible building (the joint-owner premises
b: any of the following subparagraphs (i) to (iv) apply to it:
i: it is an integral component of the eligible building (such as the roof and foundations); or
ii: it is an appurtenant structure for the joint-owner premises under subsection (4); or
iii: it is service infrastructure for the joint-owner premises under subsection (5); or
iv: it is an area in the eligible building that is not part of any of the premises in the building (such as a foyer); and
c: the owners referred to in paragraph (a) all have an insurable interest in it (whether or not the owners of any other premises in the building also have an insurable interest in it).
3: However, part of the building is not joint property if it is excluded property.
4: Property is an appurtenant structure for the joint-owner premises
a: the property—
i: is part of the eligible building but is not part of a dwelling; or
ii: is, or is part of, a separate building or another immovable structure; and
b: the property is appurtenant to all the joint-owner premises; and
c: the property is used—
i: by the owners or other occupants of the joint-owner premises that are dwellings for household purposes (such as for parking, storage, or recreation) or for access to the dwellings; or
ii: to house service infrastructure for all the joint-owner premises.
5: Property is service infrastructure for the joint-owner premises
a: the infrastructure—
i: provides a service to all the joint-owner premises; and
ii: is in, or within 60 metres of, the eligible building; or
b: the infrastructure—
i: provides a service to an appurtenant structure for the joint-owner premises or other joint property that is part of the eligible building; and
ii: is in, or within 60 metres of, the eligible building; or
c: the infrastructure—
i: provides a service to any other appurtenant structure for the joint-owner premises; and
ii: is in, or within 60 metres of, the appurtenant structure; or
d: the infrastructure—
i: provides a service to joint land for the eligible building; and
ii: is in, or within 60 metres of, the eligible building or an appurtenant structure for the joint-owner premises.
6: In subsection (5), infrastructure service section 12
15: Shared property
1: Any residential building may include shared property.
2: The shared property
3: To avoid doubt, in the case of a mixed-use building, property that is common property or joint property in relation to that building may also be shared property as between the insured person and another person. Example
If an apartment block that is a mixed-use building shares a party wall with a neighbouring office block, all the owners of premises in the apartment block have an insurable interest in the wall, and it is for the benefit of those owners, the party wall would be common property for the apartment block. As all those owners are the insured person for the building, their interests in the wall do not make it shared property. However, as the wall is shared by both buildings, it is shared property as between the insured person for the apartment block and the persons who have insurable interests in the office block.
16: Insured person’s land
1: In relation to a residential building or residential land, the insured person’s land
2: The land holding within which a residential building is situated
a: the estate or interest held by the insured person in the land on which the residential building is lawfully situated; and
b: any other estate or interest in land held by the insured person that relates to land that is—
i: contiguous with the land referred to in paragraph (a); and
ii: used, or intended to be used, with the land referred to in paragraph (a) as a single residential property; and
c: any other estate or interest in land that benefits an estate or interest referred to in paragraph (a) or (b).
3: The land holding within which a residential building is situated does not include any non-proprietary right to use the land (such as a licence to occupy or an encroachment licence).
4: If 2 areas of land that would otherwise be contiguous are divided only by a watercourse, road, railway, or other access way, or a similar narrow area of separation, the 2 areas are taken to be contiguous for the purposes of subsection (2).
17: Residential land
1: The residential land
a: the part of the insured person’s land on which the residential building is situated; and
b: any other part of the insured person’s land that is within 8 metres of the residential building; and
c: any other part of the insured person’s land that—
i: is part of the main access way from the boundary of the insured person’s land to the residential building, or supports land that is part of that access way; and
ii: is within 60 metres of the residential building; and
d: any retaining walls for the residential building; and
e: any bridges or culverts for the residential building.
2: However, land is not residential land if it is excluded property.
3: In this section, a reference to the residential building does not include any service infrastructure that is outside both the eligible building and the appurtenant structures.
18: Retaining walls and bridges or culverts
1: A retaining wall
a: that are necessary to support or protect—
i: the residential building; or
ii: the residential land referred to in section 17(1)﻿(a) to (c)
b: that are within 60 metres of the residential building, whether or not it is on the insured person’s land.
2: A bridge or culvert
a: land referred to in section 17(1)﻿(a) to (c)
b: land that is outside the insured person’s land but is otherwise land of the kind referred to in section 17(1)﻿(a) to (c)
3: However, property is not a retaining wall or a bridge or culvert for the residential building if the insured person for the residential land does not have an insurable interest in the property.
4: In subsection (1)﻿(a)﻿(i) and (b), a reference to the residential building does not include any service infrastructure that is outside both the eligible building and the appurtenant structures.
19: Common land, joint land, and shared land
1: If an eligible building is a mixed-use building, the residential land may include common land or joint land, or both. (There is no common land or joint land for a building that is not a mixed-use building.)
2: The common land
a: that is available for use by, or is for the benefit of, the owners or other occupants of all premises in the eligible building; and
b: in which the owners of all of those premises have an insurable interest.
3: The joint land
a: that is available for use by, or is for the benefit of, the owners or other occupants of some of the premises in the building (including at least 1 dwelling) but not all of those premises; and
b: in which those owners have an insurable interest (whether or not the owners of any other premises in the building also have an insurable interest).
4: Any residential land may include shared land.
5: The shared land
6: To avoid doubt, where the eligible building is a mixed-use building, land that is common land or joint land in relation to the residential building may also be shared land as between the insured person and another person. Example
If the residential land for a mixed-use building shares a retaining wall with a neighbouring property, all the owners of premises in the mixed-use building have an insurable interest in the wall, and it is for the benefit of those owners, it would be common land. As all those owners are the insured person for the land, their interests in the wall do not make it shared land. However, as the wall is shared by both properties, it is shared land as between the insured person for the mixed-use building and the persons who have insurable interests in the neighbouring land.
20: Common ownership interest, joint ownership interest, and shared ownership interest
1: If an eligible building is a mixed-use building, the common ownership interest
a: the percentage of the interest in the residential building’s common property or common land (or in the entity that owns that property or land) that is held by the owners of the dwellings in the eligible building by reason of their ownership of the dwellings; or
b: if that percentage is not ascertainable, the eligible building’s residential percentage. Examples
Example 1 In a unit title building consisting of dwellings and shops, if the owners of the dwellings have ownership interests of 360 out of a total of 1000, the common ownership interest would be 36% ( see section 38 If the owner of one of the dwellings also owns some of the shops, the common ownership interest would still be 36% because that person’s interest in the common property as a result of owning the shops is not counted. Example 2 In a residential building that is owned by a flat or office owning company to which subpart 6 Example 3 In a residential building held under a cross-lease title arrangement, if the owners of the dwellings own two-fifths of the title to the land on which it is built, the common ownership interest would be 40%. Example 4 If a residential building consists of a flat above a shop and the whole building is a single undivided title, subsection (1)﻿(b) would apply. If the floor areas are 70 m 2 2
2: If an eligible building is a mixed-use building, the joint ownership interest
a: the percentage of the repair responsibility held by the owners of the joint-owner premises that are dwellings; or
b: if that percentage is not ascertainable, the percentage of the interest in the joint property or joint land that is held by the owners of the joint-owner premises that are dwellings by reason of their ownership of the dwellings.
3: The percentages in subsections (1)﻿(a) and (2)﻿(a) and (b) are to be determined as percentages of the total interest or repair responsibility held by the owners of all of the premises in the eligible building.
4: An insured person’s shared ownership interest
a: if the insured person is the only person with repair responsibility, 1; or
b: if 2 or more persons share repair responsibility, the insured person’s percentage of the repair responsibility; or
c: if that percentage is not ascertainable, the percentage of the total of all insurable interests in the shared property or shared land that is held by the insured person. Examples
Example 1 If there are 2 semi-detached dwellings that share a party wall and the insured persons for the dwellings share equal responsibility to replace or reinstate the wall, their shared ownership interest in the party wall would be 50% each. Example 2 However, if the insured person for 1 of the dwellings is solely responsible for replacing or reinstating the wall, that person’s shared ownership interest would be 100% and the other insured person’s interest would be 0%. Example 3 If a house and a shop have a retaining wall on the boundary of their land and share equal responsibility for it, the insured person’s shared ownership interest in the retaining wall would be 50%. The other 50% interest is not covered under this Act because the shop is not a residential building.
5: A common ownership interest, joint ownership interest, or shared ownership interest, or a person’s repair responsibility or anything else that needs to be determined in order to determine an ownership interest must be determined in accordance with any requirements in the regulations relating to—
a: how the interest, responsibility, or other thing is to be determined; and
b: the matters to be taken into account in making the determination.
6: In this section,— joint-owner premises section 14 repair responsibility
a: for subsection (2), the damaged joint property or joint land; and
b: for subsection (3), the damaged shared property or shared land. Fire insurance contract, fire insurer, and insured person
21: Fire insurance contract and fire insurer
1: Fire insurance contract fire insurer
a: a contract of reinsurance; or
b: a contract that insures against physical loss or damage by natural hazard fire but not other fire.
2: A contract of insurance is not prevented from being a fire insurance contract only because—
a: it insures other property in addition to dwellings; or
b: it does not insure against loss or damage that is a direct result of a natural hazard fire.
3: For the purposes of this Act, a contract of insurance that is renewed is taken to be a new contract entered into when cover under the renewed contract commences.
4: The fire insurance contract
22: Insured person
1: The insured person
a: the residential building; or
b: the residential building situated on the residential land.
2: In addition, in sections 15(2) 19(5) 20(4) insured person
3: If the insured person for an eligible building ( building A building B
a: the person in their capacity as the insured person for building A (and the rest of the residential building that building A is part of and its residential land); and
b: the person in their capacity as a person with an insurable interest in building B (and any other building or land associated with it),— are taken to be 2 separate persons. Natural hazards and natural hazard damage
23: Natural hazard
1: Each of the following is a natural hazard
a: an earthquake:
b: hydrothermal activity:
c: a landslide:
d: a tsunami:
e: volcanic activity:
f: a flood:
g: a storm:
h: a natural hazard fire.
2: However, the normal action of the wind or water causing gradual erosion (including, for example, coastal erosion, bank erosion, and sheet erosion) is not a natural hazard.
24: Natural hazard damage
1: Physical loss or damage to a residential building or residential land is natural hazard damage
a: it occurs as a direct result of a natural hazard; or
b: it occurs as a direct result of measures taken under proper authority to mitigate the consequences of a natural hazard; or
c: it is imminent damage. Example
If an earthquake causes cracks in the roof of a house, the cracks let water in when it rains, and the water damages the ceiling and walls, both the damage to the roof and the damage done by the water are a direct result of the earthquake and so both are natural hazard damage. Mitigation damage
2: Loss or damage referred to in subsection (1)﻿(b)—
a: is natural hazard damage regardless of whether it is intentional or accidental; and
b: is taken to occur as a direct result of the natural hazard in relation to which the measures were taken. Imminent damage
3: Physical loss or damage to a residential building or residential land that has not yet occurred is imminent damage
a: a natural hazard has occurred ( event 1
b: the Commission is of the opinion that, as a direct result of event 1, the loss or damage is more likely than not to occur within 12 months after event 1 first occurred. Example
A landslide on a slope below a house and garden shed creates a risk of further land falling down the slope, which could undermine support for the house and shed. The Commission considers that in the next 12 months, at least some further land will fall down the slope. The shed is close to the slope, and the Commission considers it more likely than not that the shed will be undermined within 12 months, unless it is relocated away from the slope. The house is further away from the slope, and the Commission considers it more likely than not that the house will not be undermined within 12 months. In that case, the possible future damage to the shed is imminent damage, but the possible future damage to the house is not imminent damage. The further land damage that the Commission considers will more likely than not occur in the next 12 months is also imminent damage.
4: Imminent damage is taken to have occurred at the time event 1 first occurred. What is not natural hazard damage
5: However, loss or damage is not natural hazard damage if any of the following paragraphs (a), (b), or (c) apply to it:
a: it is loss or damage to a residential building and occurs as a direct result of a storm, a flood, a natural hazard fire occasioned by, through, or in consequence of a storm or flood, or a combination of them; or
b: it is loss or damage referred to in subsection (1)﻿(a) but before it occurred it was imminent damage for which a claim has been made; or Example
In the example for subsection (3), if the insured person makes a claim for the imminent damage and the expected damage does in fact occur, that actual damage is not natural hazard damage.
c: it is loss or damage referred to in subsection (1)﻿(b) but compensation for the loss or damage is payable under another Act.
6: Subsection (5)﻿(b) applies regardless of when the actual loss or damage occurs. Other preliminary provisions
25: Transitional, savings, and related provisions
The transitional, savings, and related provisions set out in Schedule 1
26: Act binds the Crown
This Act binds the Crown.
27: Property outside New Zealand not covered
This Act does not apply to a dwelling or other property that is situated outside New Zealand.
2: Natural hazard cover
1: Insurance against natural hazard damage
28: Natural hazard cover insures against natural hazard damage
1: This Act provides insurance against natural hazard damage ( natural hazard cover
2: Natural hazard cover has the following 2 components:
a: building cover, which insures the residential building ( see subpart 2
b: land cover, which insures the residential land ( see subpart 3
3: Natural hazard cover does not include insurance against consequential loss (such as temporary accommodation costs, loss of profits, loss or damage as a result of theft, vandalism, or business interruption, or loss of intangible property).
29: When natural hazard cover commences and ceases
1: Natural hazard cover for a residential building—
a: commences when the insurance cover under the fire insurance contract for the dwellings in the eligible building commences; and
b: continues while the dwellings remain insured under the fire insurance contract, unless the natural hazard cover is cancelled under section 49
2: Natural hazard cover is not interrupted or affected by—
a: the occurrence of natural hazard damage; or
b: the making or settling of a claim; or
c: any failure to pay the levy or an amount payable under section 118 Effect of becoming or ceasing to be dwelling
3: If a dwelling is insured under a fire insurance contract but ceases to be a dwelling during the period of the contract, this Act continues to apply as if it were still a dwelling until the insurance cover under the fire insurance contract ceases or is renewed.
4: If—
a: property that does not include a dwelling is insured under a contract of insurance against physical loss or damage by fire; and
b: all or part of the property becomes a dwelling during the period of the contract,— that contract is not a fire insurance contract for the purposes of this Act, but if it is renewed, the renewed contract is a fire insurance contract. Guidance note
A contract of insurance that is renewed is taken to be a new contract entered into when the renewal occurs ( see section 21
2: Building cover
30: Building cover insures residential building on replacement cost basis
1: Building cover provides insurance for a residential building on a replacement cost basis.
2: However, building cover is subject to—
a: the other provisions of this Act (such as section 49 section 50 section 67
b: any conditions imposed by the regulations. Guidance note
Excluded property listed in Schedule 2
31: Building claim entitlement
1: If a residential building suffers natural hazard damage, the amount that may be paid for a claim made in respect of building cover is the building claim entitlement.
2: The building claim entitlement
a: the lesser of—
i: the replacement cost of the damaged parts of the residential building; and
ii: the building cover cap for the residential building determined under sections 35 to 37
b: the building cover excess, being the number of dwellings in the residential building multiplied by $500 (including GST).
3: However, if the building cover excess is greater than the amount calculated under subsection (2)﻿(a), the building claim entitlement is zero. Guidance note
All natural hazard damage that occurs during a damage period is generally the subject of the same claim ( see section 53
32: Replacement cost
1: The replacement cost
a: modified as necessary to comply with all applicable laws (such as the Building Act 2004
b: replaced or reinstated using materials and methods that are currently in common use.
2: The total cost
a: the costs of all replacement or reinstatement work, which may include—
i: work that needs to be done to undamaged parts of the residential building in order for the damaged parts to be replaced or reinstated; or
ii: relocating parts of the residential building; and
b: the costs of demolition and removal of debris to the extent that is reasonably required to carry out the replacement or reinstatement work; and
c: the costs of complying with all applicable laws; and
d: other fees or costs payable in the course of carrying out the replacement or reinstatement work (for example, architects’ fees and fees payable to local authorities); and
e: GST.
3: If, immediately before the natural hazard damage occurred, the insured person had a legal obligation under an applicable law to modify any property (whether at the time or in the future), the replacement cost does not include the cost of modifications required to comply with that law.
4: The replacement cost also does not include—
a: claim handling costs; or
b: any allowance for contingencies.
5: However, this section is subject to—
a: section 33
b: section 34 Guidance note
If a claim is settled by payment of the replacement cost, the actual replacement cost is more than expected, and the insured person gives further information about those costs to the Commission, the Commission can reconsider its decision and may pay the extra costs ( see section 57(4)
33: Proportionate costs for shared, common, or joint property
1: This section applies for the purpose of determining the replacement cost of any of the damaged property that is shared property, common property, or joint property.
2: In respect of shared property, the replacement cost is the amount that would be the replacement cost in the absence of this section multiplied by the insured person’s shared ownership interest.
3: In respect of common property, the replacement cost is the amount that would be the replacement cost in the absence of this section multiplied by the residential building’s common ownership interest.
4: In respect of joint property, the replacement cost is the amount that would be the replacement cost in the absence of this section multiplied by the joint property’s joint ownership interest.
5: If the damaged property is—
a: shared property and common property, subsection (2) applies and then subsection (3) applies (with any necessary modifications); or
b: shared property and joint property, subsection (2) applies and then subsection (4) applies (with any necessary modifications).
34: Replacement cost for imminent damage
1: This section applies for the purpose of determining the replacement cost of any parts of the residential building to the extent that they are the subject of imminent damage.
2: The replacement cost in respect of the imminent damage must be determined using the future replacement cost under subsection (3), the mitigation cost under subsection (4), or a combination of both as the Commission considers appropriate.
3: The future replacement cost section 32
4: The mitigation cost see section 65
5: In deciding whether, or to what extent, to use the future replacement cost or mitigation cost, the Commission must take into account the following:
a: whether, or to what extent, mitigation—
i: is technically feasible; and
ii: could lawfully be carried out; and
iii: is likely to be effective:
b: the relative costs of future replacement and mitigation:
c: if the residential land has also suffered natural hazard damage, whether, or to what extent, the work referred to in subsection (4)—
i: might need to be taken to reinstate the damaged land; or
ii: might also mitigate the risk of imminent damage to the land:
d: any other matters specified in the regulations.
6: Subsection (7) applies if—
a: the residential land has also suffered natural hazard damage; and
b: the Commission decides to do either or both of the following:
i: determine all or part of the replacement cost using the mitigation cost under this section:
ii: determine all or part of the reinstatement cost using the mitigation cost under section 47
7: The Commission must—
a: determine the cost of work to which subsection (4) or section 47(4)
b: allocate that cost between the replacement cost and the reinstatement cost in accordance with the regulations. Example
If a residential building includes a garden shed and an earthquake occurs that does not damage the shed but leaves it at imminent risk of damage from landslides, it may be appropriate to relocate the shed rather than undertake mitigation work to prevent damage from future landslides.
35: Building cover cap: specified replacement sum insured
1: This section applies if the fire insurance contract specifies a replacement sum insured for the residential building (or 2 or more sums covering different parts of the residential building).
2: The building cover cap for the residential building is the lesser of—
a: the specified replacement sum insured (or the total of those sums); and
b: the number of dwellings in the residential building multiplied by $300,000 plus GST.
3: If a fire insurance contract insures 2 or more eligible buildings, this section applies in relation to any one of those buildings only if the contract specifies a replacement sum insured in relation to that building and that sum does not cover any other eligible building. Guidance note
For the number of dwellings in a building, see section 10
36: Building cover cap: specified amount for natural hazard cover
1: This section applies if—
a: section 35
b: the fire insurance contract specifies an amount for which the residential building is to be insured under this Act.
2: The building cover cap for the residential building is—
a: the greater of—
i: the specified amount; and
ii: the insured floor area multiplied by $2,500 plus GST; or
b: the number of dwellings in the residential building multiplied by $300,000 plus GST, if that is less than the amount determined under paragraph (a).
3: If a fire insurance contract insures 2 or more eligible buildings, this section applies in relation to any one of those buildings only if the contract specifies an amount in relation to that building and that amount does not cover any other eligible building.
4: The insured floor area
a: the floor area of the whole of the eligible building; and
b: the floor area of all appurtenant structures for the dwellings that are not part of the eligible building but are, or are part of, a different building.
5: The insured floor area f = d + a + j + (c × r ÷ 100) where— f is the insured floor area d is the floor area of the dwellings in the residential building a is the floor area of all appurtenant structures for the dwellings that are, or are part of, a building j is the floor area of all appurtenant structures for any joint-owner premises (as defined in section 14(4) c is the floor area of any common property that is, or is part of, a building r is the eligible building’s residential percentage. Guidance note
For the number of dwellings in a building, see section 10
37: Building cover cap: no specified amount
If neither of sections 35 36 Guidance note
For the number of dwellings in a building, see section 10
3: Land cover
38: Land cover insures residential land on indemnity basis
1: Land cover provides insurance for the residential land in relation to a residential building on an indemnity basis.
2: However, land cover is subject to—
a: the other provisions of this Act (such as section 49 section 50 section 67
b: any conditions imposed by the regulations. Guidance note
Excluded property listed in Schedule 2
39: Land claim entitlement
1: If residential land suffers natural hazard damage, the amount that may be paid for a claim made in respect of land cover is the land claim entitlement.
2: The land claim entitlement
a: the lesser of—
i: the actual loss suffered (determined under section 40
ii: the land cover cap (determined under section 43
b: the land cover excess, being the lesser of—
i: the number of dwellings in the residential building multiplied by $500 (including GST); and
ii: $5,000 (including GST).
3: However, if the land cover excess is greater than the amount calculated under subsection (2)﻿(a), the land claim entitlement is zero. Guidance notes
Note 1 For the number of dwellings in a building, see section 10 Note 2 All natural hazard damage that occurs during a damage period is generally the subject of the same claim ( see section 53
40: Actual loss suffered
1: The actual loss suffered
a: by the person who was the insured person for the residential land at the time the natural hazard damage occurred; and
b: as a direct result of the natural hazard damage to the residential land, but not including any consequential loss ( see section 28(3)
2: To the extent that the actual loss suffered can be reasonably quantified using reinstatement cost or diminution of value, or a combination of both, the Commission must quantify the loss in that way.
3: Which method is used to quantify the actual loss suffered depends on all the circumstances, including—
a: whether, or to what extent, reinstatement—
i: is technically feasible; and
ii: could lawfully be carried out; and
iii: would be disproportionately expensive compared with the diminution of value if the land were not reinstated; and
b: whether, or to what extent, the person referred to in subsection (1) has reinstated the land or intends to do so.
41: Reinstatement cost
1: The reinstatement cost
2: The reinstatement may be full reinstatement, partial reinstatement, or a combination of both in respect of different parts of the damaged land.
3: Full reinstatement
a: is able to support or protect the residential building and access to it to substantially the same extent as it did before the land was damaged; and
b: is able to be used for substantially the same purpose as it was used before it was damaged; and
c: is not materially more or less valuable than it was before it was damaged.
4: Partial reinstatement
a: the land’s ability to support or protect the residential building and access to it:
b: the usability of the land for the purpose for which it was used before it was damaged.
5: If the natural hazard damage includes the accumulation of earth, rock, or other debris on the residential land, the reinstatement cost in respect of that accumulation is the cost of removing the debris.
6: The total cost
a: the costs of all reinstatement work (including the cost of any work that needs to be done to undamaged parts of the residential land in order for the damaged land to be reinstated); and
b: the costs of complying with all applicable laws; and
c: other fees or costs payable in the course of carrying out the reinstatement work (for example, architects’ fees and fees payable to local authorities); and
d: GST.
7: If, immediately before the natural hazard damage occurred, the insured person had a legal obligation under an applicable law to modify any property (whether at the time or in the future), the reinstatement cost does not include the cost of modifications required to comply with that law.
8: The reinstatement also does not include—
a: claim handling costs; or
b: any allowance for contingencies.
9: However, this section is subject to—
a: section 46
b: section 47 Guidance note
If a claim is settled by payment of the reinstatement cost, the actual reinstatement cost is more than expected, and the insured person gives further information about those costs to the Commission, the Commission can reconsider its decision and may pay the extra costs ( see section 57(4)
42: Diminution of value
1: The diminution of value
2: To avoid doubt, the diminution of value does not include any loss of value resulting from any of the following (whether occurring as a direct result of the natural hazard or otherwise):
a: damage to the residential building:
b: changes in the value of the residential building (other than changes that are a direct result of the natural hazard damage to the damaged residential land):
c: damage to, or changes in the value of, other land or buildings:
d: any general stigma arising from the natural hazard:
e: changes in market conditions:
f: regulatory changes.
3: However, this section is subject to section 46
43: Land cover cap
1: The land cover cap
a: the assessed market value; plus
b: if there are any damaged retaining walls for the residential building, the lesser of—
i: the undepreciated value of the damaged retaining walls; and
ii: the number of dwellings in the residential building multiplied by $50,000 plus GST; plus
c: if there are any damaged bridges or culverts for the residential building, the lesser of—
i: the undepreciated value of the damaged bridges or culverts; and
ii: the number of dwellings in the residential building multiplied by $25,000 plus GST.
2: However, this section is subject to section 46 Guidance note
For the number of dwellings in a building, see section 10
44: Assessed market value
1: If the area of the damaged part of the residential land is less than or equal to the area cap, the assessed market value
2: If the area of the damaged part of the residential land is greater than the area cap, the assessed market value
a: has an area equal to the area cap; and
b: is situated in the same place as the residential land; and
c: has all of the same features as the residential land.
3: The prior market value
4: The valuation must be made using per square metre market rates, applying (where appropriate) different rates for different areas of the land based on their different utility (but so that the sum of the values of the different areas equates to the value of the land being valued as a whole).
5: However, this section is subject to section 46
6: In this section,— area cap
a: if there is a district plan minimum area, the lesser of—
i: the district plan minimum area; and
ii: 4,000 square metres; or
b: if there is no district plan minimum area, 4,000 square metres district plan Part 5 district plan minimum area
45: Undepreciated value of retaining walls, bridges, or culverts
1: The undepreciated value
2: The total cost
a: the cost of all construction work; and
b: the costs of complying with all applicable laws, other than any requirements in the current building standards or other laws that would require modification of the structure from when it was new; and
c: other fees or costs payable in the course of constructing the structure (for example, architects’ fees and fees payable to local authorities) as if the structure did comply with current building standards and applicable laws; and
d: GST.
3: The undepreciated value does not include—
a: the cost of carrying out any work other than the actual construction of the structure, even if that work would be necessary to enable the structure to be constructed (such as removing the damaged structure or removing or rebuilding other structures to provide access to the construction site); or
b: claim handling costs; or
c: any allowance for contingencies.
46: Proportionate costs, values, and amounts for shared, common, or joint land
1: This section applies for the purpose of determining the following (each a relevant amount
a: the reinstatement cost of any of the damaged residential land that is shared land, common land, or joint land:
b: any part of the diminution of value that relates to shared land, common land, joint land, shared property, common property, or joint property:
c: the assessed market value of any residential land that is shared land, common land, or joint land:
d: the undepreciated value of any retaining wall or bridge or culvert that is shared land, common land, or joint land.
2: In respect of shared land, each relevant amount is the amount that would be the relevant amount in the absence of this section multiplied by the insured person’s shared ownership interest.
3: In respect of common land, each relevant amount is the amount that would be the relevant amount in the absence of this section multiplied by the residential land’s common ownership interest.
4: In respect of joint property, each relevant amount is the amount that would be the relevant amount in the absence of this section multiplied by the joint land’s joint ownership interest.
5: If the damaged land is—
a: shared land and common land, subsection (2) applies and then subsection (3) applies (with any necessary modifications); or
b: shared land and joint land, subsection (2) applies and then subsection (4) applies (with any necessary modifications).
47: Reinstatement cost for imminent damage
1: This section applies for the purpose of determining the reinstatement cost of any of the damaged residential land to the extent that it is the subject of imminent damage.
2: The reinstatement cost in respect of the imminent damage must be determined using the future reinstatement cost under subsection (3), the mitigation cost under subsection (4), or a combination of both as the Commission considers appropriate.
3: The future reinstatement cost section 41
4: The mitigation cost
5: In deciding whether, or to what extent, to use the future reinstatement cost or mitigation cost, the Commission must take into account the following:
a: whether, or to what extent, mitigation—
i: is technically feasible; and
ii: could lawfully be carried out; and
iii: is likely to be effective:
b: the relative costs of future reinstatement and mitigation:
c: if the residential building has also suffered natural hazard damage, whether, or to what extent, the work referred to in subsection (4)—
i: might need to be taken to replace or reinstate the damaged building; or
ii: might also mitigate the risk of imminent damage to the building:
d: any other matters specified in the regulations. Guidance note
If subsection (5)﻿(c) applies, costs may be allocated between the reinstatement cost for the damaged land and the replacement cost for the damaged building under section 34(7)
4: Other provisions relating to natural hazard cover
48: Optional insurance for property without natural hazard cover
1: The Commission may, on application, provide insurance ( direct cover
2: A person may apply for direct cover only if they have an insurable interest in the property.
3: Direct cover—
a: may be provided—
i: for property that does not have natural hazard cover; or
ii: instead of natural hazard cover that would otherwise cover the property; and
b: may only be provided for both the residential building and its residential land.
4: Direct cover is to be provided by a contract of insurance—
a: between the Commission and the applicant; and
b: on the terms and for a period, set out in the contract, that the Commission considers appropriate, but subject to subsection (5).
5: If direct cover is provided for property, this Act applies (with any necessary modifications) as if the cover were natural hazard cover, except to the extent that the contract expressly provides otherwise.
6: If subsection (3)﻿(a)﻿(ii) applies, while the direct cover is in force, the property is not covered by natural hazard cover.
7: Premiums paid for the direct cover must be paid into the Fund.
49: Cancellation of cover
1: This section applies if—
a: a claim is settled by payment of a building claim entitlement or a land claim entitlement, or both; and
b: either or both of the following subparagraphs (i) and (ii) apply:
i: if the claim includes a claim against building cover, the building claim entitlement was calculated based on the building cover cap referred to in section 31(2)﻿(a)﻿(ii)
ii: if the claim includes a claim against land cover,—
A: the land claim entitlement was calculated using the assessed market value; and
B: the area of the damaged part of the residential land is equal to or greater than the area cap (as defined in section 44
c: if there are reasonable steps that the insured person could take to replace or reinstate the damaged property,—
i: sufficient time has elapsed since the claim was settled to give the insured person reasonable opportunity to take such steps; and
ii: no such steps have been taken.
2: The Commission may cancel building cover, land cover, or both for the residential building and residential land by giving the insured person written notice of the cancellation and the reasons for it.
3: The cancellation takes effect when the notice is given and continues until the cover is reinstated under subsection (6).
4: Cover may be cancelled for a residential building and its residential land even if the prior settlement related to only 1 of them.
5: Cancellation of cover for the residential land in relation to a residential building applies only to the residential land for that building (and not to any other parts of the insured person’s land).
6: The Commission must reinstate cancelled cover if, on application by a person affected by the cancellation, it considers that the cancellation should no longer apply.
7: To avoid doubt, the cancellation is not affected by—
a: a new fire insurance contract being entered into; or
b: any change of the insured person or persons having an insurable interest in the property.
50: Limitation of liability for preventable repeat damage
1: This section applies if—
a: either—
i: a residential building has suffered natural hazard damage as a direct result of a landslide; or
ii: residential land has suffered natural hazard damage as a direct result of a landslide, flood, or storm; and
b: the Commission considers that—
i: it is likely that in future the residential building or residential land will suffer further natural hazard damage ( future damage
ii: the insured person could take reasonable steps to mitigate the risk of future damage.
2: The Commission may limit its liability for future damage to the residential building or residential land (or both) by giving the insured person written notice that claims for future damage may be declined under sections 67 73
3: The limitation takes effect when the notice is given to the insured person and continues until it is removed under subsection (4).
4: The Commission must remove the limitation if, on application by a person affected by the cancellation, it considers that the limitation should no longer apply.
5: To avoid doubt, the limitation is not affected by—
a: a new fire insurance contract being entered into; or
b: any change of the insured person or persons having an insurable interest in the property.
51: Cancellation or limitation of liability to be recorded on land title
1: This section applies if the Commission—
a: cancels building cover or land cover under section 49
b: limits its liability for future damage under section 50
2: The Commission must give a certificate to the Registrar-General of Land stating that the Commission has cancelled the cover or limited its liability (as the case requires).
3: If the Commission reinstates cancelled cover under section 49(6) section 50(4)
4: A certificate or notice given to the Registrar-General of Land must—
a: be in the form, and include the information, required by the regulations; and
b: be given as soon as practicable after the notice is given under section 49(2) 50(2)
5: The Registrar-General of Land must (without charge) register the certificate (or any amendment to it) or discharge on the record of title for the land to which it relates.
3: Claims
1: Making claims
52: Insured person may make claim
1: If a residential building or residential land (or both) suffers natural hazard damage, the insured person may make a claim against the property’s natural hazard cover.
2: The claim must include—
a: the insured person’s name and contact details; and
b: the address or location of the damaged property; and
c: any other information required by the regulations.
3: The claim must be made in the way required by the regulations.
53: Claim covers all damage that occurs during damage period and may include later damage
1: This section applies if—
a: a residential building, residential land, or both (the insured property initial damage hazard A
b: the insured person makes a claim ( claim A
2: If, during the damage period for claim A ( period A second damage Example
If a house is damaged by an earthquake, the natural hazard damage that occurs at the time of that earthquake is initial damage and the subject of a claim. If the house is damaged again by a second earthquake 12 hours later, the damage caused by the second earthquake is the subject of the same claim.
3: If, after the end of period A, the insured property suffers further natural hazard damage as a direct result of—
a: the continuation of hazard A or another hazard that caused second damage; or
b: a new natural hazard,— that further damage ( third damage Example
If a house is damaged by volcanic activity at 3 pm on Sunday, the damage period continues until 3 pm on the following Sunday, so all natural hazard damage that occurs during that period is the subject of a single claim. If there is an earthquake on the following Monday that results in further damage to the house, the earthquake damage is third damage, so it is not part of the same claim as the volcanic damage.
4: However, when third damage occurs, this section applies again with the third damage being initial damage under subsection (1) for which the insured person may make another claim (which will have a new damage period). Example
In the example for subsection (3), the earthquake damage is initial damage for which the insured person can make another claim.
5: If,—
a: after the end of period A, the insured property suffers further natural hazard damage ( extended damage
b: subsection (3) does not apply because the extended damage is not the result of that hazard continuing,— any claim for the extended damage is part of claim A. Example
If the walls of a house are damaged by an earthquake, that is initial damage and the subject of a claim. If the damage to the walls results in the roof collapsing a week later (so after the end of the damage period), the damage to the roof is the subject of the same claim as the damage to the walls.
6: In this section, damage period
a: beginning at the time the initial damage occurs (the start time
b: ending,—
i: if the initial damage is a direct result of an earthquake, a flood, hydrothermal activity, a landslide, a storm, or a tsunami, 48 hours after the start time; or
ii: if the initial damage is a direct result of volcanic activity or a natural hazard fire, on the seventh day after the day on which the initial damage occurs and at the same time on that seventh day as the start time.
54: Time for making claim
1: A claim may be made—
a: on or before the standard claim date; or
b: after the standard claim date but on or before the extended claim date; or
c: after the extended claim date if that is permitted by subsection (2).
2: A claim may be made after the extended claim date if—
a: the regulations allow late claims to be made; and
b: either or both of the following apply:
i: the damage could not reasonably have been discovered in time to enable the insured person (acting reasonably promptly) to make a claim on or before the extended claim date:
ii: the insured person is unable to make a claim on or before the extended claim date because of absence, incapacity, or other disability; and
c: the claim is made both—
i: as soon as practicable after the damage is discovered or as soon as the insured person is reasonably able to make the claim (as the case requires); and
ii: within the period required by the regulations.
3: In this section,— extended claim date standard claim date Guidance note
The Commission may be able to decline a claim made after the standard claim date ( see section 68
55: Providing further information
1: As soon as practicable after making the claim, the insured person must give to the Commission sufficient details about the following to enable the claim to be assessed, decided, and settled:
a: the damaged property:
b: the natural hazard:
c: the natural hazard damage:
d: the fire insurance contract and any other insurance contract under which any of the damaged property is insured:
e: any other persons who have an insurable interest in the damaged property:
f: any other matters set out in the regulations.
2: The Commission may specify (in a particular case or for any class of cases or all cases) the details that are required under subsection (1).
3: The information must be obtained (if the insured person does not already have it) and given to the Commission at the insured person’s expense.
4: The Commission may defer taking any action in relation to the claim until it is given the required information.
56: Updating information
1: This section applies if the insured person becomes aware of—
a: any material change in any information relating to the claim that—
i: the insured person has given to the Commission; or
ii: the insured person knows, or ought reasonably to know, that the Commission has obtained from another source; or
b: any new information that is relevant to the claim.
2: The insured person must give the changed or new information to the Commission as soon as practicable after becoming aware of it (whether or not the claim has been settled).
3: If the Commission is aware of information that ought to have been given to it but has not been, the Commission may defer taking any action in relation to the claim until it is given the required information. Examples
Example 1 If an insured person has made a claim for damage resulting from a landslide and later discovers more damage that is the result of the same landslide, they should give that information to the Commission and it would form part of the same claim ( see section 53 Example 2 The Commission obtains an engineer’s report to assess earthquake damage to a residential building and gives a copy of the report to the insured person. If the insured person realises that the engineer has included damage to a shed that had in fact fallen down before the earthquake (so should not be included in the claim), the insured person must tell the Commission about the mistake. Guidance note
After being given changed or new information, the Commission may reconsider any decision it has made in relation to the claim ( see section 57(4)
2: Commission must assess, decide, and settle claims
57: Commission must assess, decide, and settle claim
1: When a claim is made, the Commission must—
a: decide whether to accept it as a valid claim (in whole or part) ( see section 59
b: if (or to the extent that) it accepts the claim,—
i: assess the claim; and
ii: decide how to settle the claim ( see section 60
iii: settle the claim.
2: The Commission must assess, decide, and settle the claim—
a: in accordance with, and to the extent to which it is liable to do so under, this Act; and
b: as soon as practicable after the claim is made.
3: The Commission—
a: is not required to determine whether there is any damage to the residential building or residential land beyond that identified by the insured person; but
b: if it becomes aware of any such damage, must notify the insured person of that damage.
4: If, after making any decision in relation to a claim, the Commission obtains further information relevant to the decision (under section 56 58 Guidance notes
Note 1 The Commission may decline a claim in certain circumstances ( see section 67 Note 2 If the Commission changes a decision so as to reduce the amount payable to settle a claim, the Commission may be able to recover any overpayment under section 86
58: Commission may request further information
1: The Commission may, by written notice, request the insured person to give to the Commission, or produce for it to inspect, any information, document, or other thing that the Commission believes on reasonable grounds that it needs to assess, decide, or settle the claim.
2: The notice may—
a: relate to information, documents, or things that are within the insured person’s possession or control or that later come into their possession or control; or
b: require the insured person to obtain the information, documents, or things if they do not already have them.
3: The notice may do 1 or more of the following:
a: specify the form and manner in which information, documents, or things must be given or produced:
b: specify a reasonable period within which information, documents, or things must be given or produced:
c: require the insured person to also give a statutory declaration as to the truth of information given by the person:
d: otherwise specify how anything required by the notice must be done.
4: The information, documents, or things must be obtained (if the insured person does not already have them) and given or produced to the Commission at the insured person’s expense.
5: The regulations may also impose requirements of the kind referred to in subsection (3).
6: After giving the notice, the Commission may defer taking any action in relation to the claim until the insured person has complied with the notice and any requirements in the regulations.
7: This section applies even if the claim has been settled, if the Commission becomes aware of matters relevant to the claim that were not taken into account when it was settled or that information that ought to have been given to it has not been. Guidance note
There is also a power to enter land, buildings, or places for the purpose of obtaining information ( see sections 146 147
59: Commission must decide validity of claim
1: After receiving a claim, the Commission must,—
a: if (or to the extent that) it is satisfied that the claim meets the criteria in subsection (2), accept it as a valid claim; or
b: if (or to the extent that) it is not so satisfied, reject it as an invalid claim.
2: The criteria for a valid claim are all of the following:
a: the claim is made in accordance with section 52 section 54
b: the property the claim relates to—
i: is a residential building, residential land, or both; and
ii: is covered by natural hazard cover:
c: the property the claim relates to has suffered natural hazard damage:
d: the claimant—
i: has an insurable interest in the property the claim relates to; and
ii: is the insured person for the property the claim relates to.
3: However, the Commission is not required to decide the validity of a claim if, before doing so, it declines the claim under section 67
4: After making a decision under subsection (1), or declining a claim (in whole or part) before deciding its validity, the Commission must notify the insured person of—
a: the Commission’s decision; and
b: the reasons for the decision; and
c: the insured person’s rights to refer disputes about referable decisions to the dispute scheme, and any information about that scheme required by the regulations.
5: If a person who has made a claim lodges another claim in relation to other damage that, under section 53 section 55
60: Commission must decide on settlement and settle claim
1: The Commission must settle a valid claim as the Commission considers appropriate—
a: using one of the methods set out in section 61
b: using 2 or more of those methods to settle different parts of the claim in different ways.
2: The Commission must decide which method or methods to use as soon as practicable after the claim is made.
3: After making its decision, the Commission must—
a: notify the insured person of the decision; and
b: settle the claim to the extent to which it is liable to do so under this Act.
4: If the Commission decides to settle the claim (in whole or part) by making a payment referred to in section 61(1)﻿(a)
5: If the Commission decides to settle the claim (in whole or part) using one of the methods set out in section 61(1)﻿(c) or (d)
6: The Commission and the insured person must comply with any procedural requirements in the regulations relating to settling claims.
7: The notice under subsection (3)﻿(a) must set out—
a: the Commission’s decision; and
b: the reasons for the decision; and
c: the insured person’s rights to refer disputes about referable decisions to the dispute scheme, and any information about that scheme required by the regulations.
8: Nothing the Commission does before giving the notice under subsection (3)﻿(a) is to be taken as evidence that the Commission has made any decision under this section.
61: Methods available to settle claim
1: The methods for settling a claim are the following:
a: paying the building claim entitlement and land claim entitlement to the insured person (or to another person who is lawfully entitled to it) ( see also sections 63 64
b: if the building claim entitlement and land claim entitlement are zero, notifying the insured person of that fact:
c: replacing or reinstating the damaged property to the standard described in section 32 41
d: relocating the residential building under section 65
e: declining the claim under section 67
2: If a claim relating to damage to a residential building and residential land is settled by relocating the building under section 65(1)﻿(b)
a: the relocation and reinstatement of the building settle the claim in relation to the residential building; and
b: the transfer of the estate or interest in the new site to the insured person under section 65(4) Guidance note
Section 60(1)
62: Date for determining amounts
1: If the Commission decides to settle a claim (or part of it) in a way that requires the calculation of the replacement cost or reinstatement cost of damaged property, the Commission must calculate the replacement cost or reinstatement cost—
a: as at the date on which it decides the amount of the replacement cost or reinstatement; or
b: if the Commission is satisfied that the circumstances of the case justify doing so, as at an earlier date (but not before the date on which the damage occurred).
2: If the Commission decides to settle a claim (or part of it) in a way that requires the calculation of the assessed market value of land or the undepreciated value of damaged property, the Commission must calculate the assessed market value or undepreciated value—
a: as at the date on which the damage occurred; or
b: if, because of circumstances relating to the cause of the damage, the claim cannot be settled promptly, as at a later date determined by the Commission. Example
If an insured person intentionally gives the Commission misleading information that results in settlement of a building cover claim taking longer than would otherwise have been the case, that may justify the Commission assessing the replacement cost as at the date on which the claim would likely have been settled if correct information had been given.
63: Settlement payments if insured person is 2 or more persons
1: This section applies if—
a: the Commission decides to settle a claim by making a payment referred to in section 61(1)﻿(a)
b: the insured person consists of 2 or more persons ( see section 22(1)
2: If both or all of those persons have agreed on whom the amount is to be paid to or how it is to be divided between them, the amount payable to the insured person must be paid as agreed.
3: If not, the Commission must divide the amount between them in the same proportions as—
a: their respective responsibilities to replace or reinstate the damaged property; or
b: if the extent of their responsibilities cannot be ascertained, their respective insurable interests in the damaged property.
4: However, subsections (2) and (3) are subject to any law to the contrary.
5: In deciding how to divide the amount under this section, the Commission must comply with any requirements in the regulations relating to—
a: how the amount is to be divided; and
b: the matters that are to be taken into account in deciding how the amount is to be divided.
64: Settlement payments if 2 or more persons entitled to payment
1: This section applies if—
a: the Commission decides to settle a claim by making a payment referred to in section 61(1)﻿(a)
b: there are 1 or more persons who—
i: are not the insured person; but
ii: are entitled to all or part of the payment under a contract (such as an assignment or a document referred to in section 79
2: The Commission must pay the amount—
a: first, to each of the persons referred to in subsection (1)﻿(b) according to their respective rights under their contracts or the other law; and
b: if any amount remains, to the insured person.
3: In deciding how to divide the amount under this section, the Commission must comply with any requirements in the regulations relating to—
a: how the amount is to be divided; and
b: the matters that are to be taken into account in deciding how the amount is to be divided. Guidance note
If a person other than the insured person has an insurable interest in the property, there may be shared property or shared land. If so, that may affect the claim settlement amount ( see sections 33 46
65: Relocating residential building
1: A claim may be settled by relocating all or part of a residential building (whether damaged or not) from the site where it was situated immediately before the natural hazard occurred (the original site new site
a: on the insured person’s land (or land that is contiguous with the insured person’s land and on which the relocated property may lawfully be situated); or
b: if, because of the natural hazard damage, that land is no longer suitable for that purpose, on other land.
2: The new site must be reasonably equivalent in all material respects to the original site.
3: The relocated property must be reinstated (including by replacing or reinstating any property damaged during the relocation) to the standard described in section 32
4: If property is relocated under subsection (1)﻿(b),—
a: the Commission must ensure that the insured person is given an estate or interest in the new site that is equivalent to, or greater than, their estate or interest in the original site; and
b: the land at the original site is then salvageable property for the purposes of sections 82 to 85
5: The Commission and the insured person must comply with any requirements in the regulations relating to how their rights and obligations under this section are to be exercised or complied with. Example
If an earthquake damages the residential land between a house and the road and a section of water pipe under the land, it might not be possible to replace the damaged section of pipe because of the damage to the land. In that case, the water pipe (both the damaged and undamaged parts of it) might be rerouted to cross the insured person’s land and the council road reserve in a different place.
66: Insured person must pay excess if non-monetary settlement
1: This section applies—
a: if the Commission decides to settle a claim (in whole or part) using the method set out in section 61(1)﻿(c) or (d)
b: the replacement, reinstatement, or relocation has been completed.
2: The insured person must, on receiving an invoice from the Commission, pay to the Commission an amount equal to,—
a: if the claim relates to a residential building, the building cover excess referred to in section 31(2)﻿(b)
b: if the claim relates to residential land, the land cover excess referred to in section 39(2)﻿(b)
3: However, if the Commission decides to settle part of the claim using the method set out in section 61(1)﻿(c) or (d) section 61(1)﻿(a)
a: must reduce the total amount for which the claim is settled by an amount equal to the building claim excess and land claim excess applicable to the claim; but
b: may do so by deducting the excesses under sections 31 39
4: Any amount paid under this section must be paid into the Fund. Declining claims
67: When Commission may decline claim
1: The Commission may decline a claim (in whole or part) if it is satisfied that grounds to do so exist under sections 68 to 77
2: The Commission may decline the claim at any time regardless of any action the Commission has taken towards assessing, deciding, or settling the claim.
3: If the Commission declines a claim (in whole or part) after making any payment in respect of the claim (or that part of the claim), section 86
68: Claim may be declined if delay is prejudicial
There are grounds to decline a claim if—
a: the claim is made after the standard claim date under section 54(1)﻿(b) or (c)
b: the lapse of time before the claim was made materially prejudices the Commission’s ability to assess the claim.
69: Claim may be declined if no financial loss
There are grounds to decline a claim if the natural hazard damage has not caused, and is not likely to cause, financial loss to the insured person because—
a: the damaged property has been, or will be, reinstated by a third party at no cost to the insured person; or
b: before the natural disaster damage occurred, the insured person intended to demolish the damaged property. Examples
Example 1 If, before a natural hazard occurred, an insured person was in the process of demolishing their house in preparation for building a new one in its place, any natural hazard damage to the house is unlikely to cause the person any financial loss. Example 2 If an insured person intended to demolish a dilapidated shed but the whole residential building was damaged in an earthquake, there would be grounds to decline a claim to the extent that it related to the shed. Example 3 If drains on residential land are damaged but are repaired by the local authority when it is repairing drains along the road at no cost to the insured person, the damage to the drains is unlikely to cause the insured person any financial loss.
70: Claim may be declined if condition not complied with
There are grounds to decline a claim if—
a: regulations imposing a condition (referred to in section 30 38
b: the condition is not complied with.
71: Claim may be declined if misleading information given to Commission or insurer
1: There are grounds to decline a claim if the insured person knowingly gives misleading information—
a: to the Commission or an authorised person for the purposes of this Act; or
b: to the fire insurer in relation to the fire insurance contract or any claim made under it.
2: In this section, misleading information
72: Claim may be declined for fraud
There are grounds to decline a claim if it (or any part of it) is fraudulent.
73: Claim may be declined for failure to protect property
1: An insured person must—
a: take reasonable steps to mitigate the risk of natural hazard damage to the residential building and residential land; and
b: if the residential building or residential land suffers natural hazard damage, take reasonable steps to mitigate the risk of any further damage.
2: Subsection (1) applies only to the extent that there are reasonable steps that the insured person could take to mitigate the risk.
3: There are grounds to decline a claim if—
a: the insured person has failed to comply with subsection (1); and
b: the natural hazard damage to which the claim relates occurred because of (or was exacerbated by) that failure.
4: This section applies whether or not the Commission has limited its liability in relation to the damage under section 50 Examples
Example 1 A claim for damage to a chimney is settled by payment of the replacement cost. There are reasonable steps that could be taken to repair the chimney. The insured person has had sufficient resources and time to make repairs but has not done so. If another natural hazard causes the chimney to fall and damage the roof, the Commission may be able to decline a claim for the later damage. Example 2 If a land cover claim relating to increased liquefaction vulnerability is settled for an amount calculated using diminution of value because the Commission considers that reinstating the land is not technically feasible, subsection (2) would likely mean that the insured person is not required to take steps to mitigate the risk of further damage (because there are no reasonable steps that could be taken).
74: Claim may be declined if damage due to intentional act, omission, or negligence
There are grounds to decline a claim if the natural hazard damage occurred because of (or was exacerbated by) an intentional act or omission of, or the negligence of,—
a: the insured person; or
b: a previous owner or occupier of the property, if the insured person was aware of the act, omission, or negligence when they acquired their insurable interest in the property.
75: Claim may be declined if damage due to unlawful conduct
There are grounds to decline a claim if the natural hazard damage occurred because of (or was exacerbated by) a failure by the insured person to comply with any law or legal requirement.
76: Claim may be declined if damage due to substandard construction
1: This section applies if a claim relates to damage to—
a: any part of a residential building that is not an integral component of the eligible building; or
b: a retaining wall, or a bridge or culvert.
2: There are grounds to decline the claim (to the extent that it relates to that damage) if—
a: the damaged property was not constructed in accordance with standards considered appropriate for that property at the time it was constructed; and
b: the damage occurred because of (or was exacerbated by) the failure to comply with those standards.
77: Claim may be declined if natural hazard notification on land title
1: There are grounds to decline a claim if—
a: the record of title for residential land (or any part of it) contains an entry under section 74 section 72
b: the notice relates to a natural hazard (as defined in section 71 section 23
c: the claim relates to damage that is a direct result of a natural hazard of the kind that the notice relates to.
2: Subsection (1) applies (with any necessary modifications) to an entry on a record of title under section 36(2) of the Building Act 1991 section 641A
3: Other provisions relating to claims
78: Assignment of benefit of claim
1: The right of an insured person to the benefit of a claim against the natural hazard cover for property that has suffered natural hazard damage is a thing in action (which can be assigned under subpart 5
2: To avoid doubt, this section does not affect—
a: any right the insured person may have to assign the benefit of a claim against the fire insurance contract; or
b: any other rights of assignment the insured person may have.
79: Insurance conditions in mortgage, etc, apply to natural hazard cover
1: If a mortgage, lease, or other document includes an express or implied covenant, condition, or power relating to the insurance against physical loss or damage by fire of a residential building or residential land, the covenant, condition, or power applies (with any necessary modifications) in relation to the natural hazard cover for the residential building or residential land.
2: However, subsection (1) is subject to any express provision to the contrary in the mortgage, lease, or other document or any regulations.
80: Subrogation of rights
1: The general law of subrogation as it relates to contracts of insurance applies in relation to natural hazard cover as if it were insurance provided under a contract of indemnity between the Commission and the insured person.
2: The insured person must (at the Commission’s expense) do anything reasonably required by the Commission to enable it to exercise or enforce any subrogated rights or remedies.
81: Ex gratia payments if honest but mistaken belief that property has natural hazard cover
1: The Commission may make an ex gratia payment to a person in relation to natural hazard damage to property if—
a: the property is not part of a residential building or residential land; but
b: the person has paid the amount referred to in section 118
2: The amount of the ex gratia payment must not exceed what would have been payable under this Act in respect of the natural hazard damage if the property had been covered by natural hazard cover.
82: Right to salvage
1: To the extent that a claim is settled by a method set out in section 61(1)﻿(a), (c), or (d) sections 83 to 85
2: Before salvaging any property, the Commission must take reasonable steps to give the insured person and the fire insurer reasonable notice of its intention to do so.
3: The Commission and the insured person must comply with any requirements in the regulations relating to how their rights and obligations under this section and sections 83 to 85
4: The regulations may provide that those rights and obligations may be enforced as if they were contractual rights and obligations.
5: The Commission—
a: is not required to salvage any damaged property; and
b: does not acquire title to, and has no obligation to remove or dispose of, damaged property that it chooses not to salvage (even if that property is abandoned by the insured person).
6: Nothing done by the Commission in the exercise, or purported exercise, of its rights under this section and sections 83 to 85
a: gives rise to any liability of the Commission to the insured person; or
b: affects any other rights or obligations of the Commission or the insured person under this Act or the regulations.
83: Salvage of property other than land
1: The Commission may salvage any part of the property to which the settlement relates (other than land) that is not required for the purposes of reinstating or replacing that property by taking possession of it.
2: The Commission must carry out any salvage work reasonably and, as far as is practicable, in a way that is co-ordinated with the reinstatement or replacement of the damaged property.
84: Salvage by acquisition of title to land
1: The Commission may salvage land only if the claim against land cover is settled for an amount equal to or greater than the prior market value (as defined in section 44 section 16 section 39(2)﻿(b)
2: If the insured person’s land includes any shared land, common land, or joint land, for the purposes of subsection (1), the prior market value of that land is to be determined in accordance with section 46
3: The Commission may, by written notice, require the insured person to transfer their title to that land to the Commission.
4: Before giving the notice, the Commission must consult the insured person about its intention to do so and give the person a reasonable opportunity to make submissions on the proposal.
5: The insured person must comply with the notice.
6: After title has been transferred, the Commission must pay compensation to the insured person for the value of any improvements on the land that are not salvageable under section 83
85: Dealing with salvaged property
1: When the Commission salvages property, it becomes the property of the Commission, and any person who acquires it from the Commission acquires good title to it.
2: The Commission must divide the proceeds of any sale of salvaged property (less costs and any compensation paid under section 84(6)
3: Any proceeds retained by the Commission must be paid into the Fund.
86: Recovery of overpayments
1: This section applies—
a: if, because of a miscalculation or other error, the amount paid to a person to settle a claim is more than the person was entitled to; or
b: if an amount has been paid to a person to settle a claim and the Commission subsequently changes its decision (under section 57(4)
c: if the Commission declines a claim (under section 67(3)
d: if an amount is otherwise paid to a person out of the Fund in error.
2: The Commission may, by written notice, require the person to repay the overpayment or amount paid in error within the time specified in the notice (which must give the person reasonable time to comply).
3: However, the Commission cannot require repayment of an amount if the recipient—
a: did not intentionally contribute to the error or overpayment; and
b: received the payment in good faith; and
c: has so altered their position in reliance on the validity of the payment that it would be inequitable to require repayment.
4: Any amount not repaid in the time allowed is recoverable by the Commission under section 109(5)
5: Any amount repaid or recovered must be paid into the Fund.
87: Claim entitlements reduced if other catastrophe insurance applies
1: This section applies if—
a: a residential building or residential land is insured by an insurer other than the Commission under a contract of insurance against physical loss or damage by 1 or more natural hazards (a contract
b: the contract is not limited to insuring the residential building or residential land only to the extent that the amount of any damage exceeds the building claim entitlement or land claim entitlement for the damage; and
c: the residential building or residential land suffers natural hazard damage as a direct result of a natural hazard referred to in paragraph (a).
2: For the purposes of section 31 39 r = n − (c + e) where— r is the reduced building claim entitlement or land claim entitlement n is the amount that would be the building claim entitlement or land claim entitlement under section 31 39 c is the amount payable under the contract in respect of the damage (or that would be payable if a claim were made) e is the total of any excess or other amounts to be borne by the insured person in relation to a claim under the contract in respect of the damage.
3: To avoid doubt, a reference in this section to a contract of insurance does not include a contract of reinsurance.
4: Code of Insured Persons’ Rights
88: Purpose of Code of Insured Persons’ Rights
1: There must be a Code of Insured Persons’ Rights.
2: The purpose of the Code is to set out the rights of insured persons to have their claims managed and settled in a fair and timely manner.
3: For that purpose, the Code must—
a: confer rights on insured persons, and impose obligations on the Commission, in relation to how the Commission is to deal with insured persons, particularly in relation to the timeliness of managing claims and the fair treatment of insured persons; and
b: provide remedies for a breach of the Code; and
c: explain an insured person’s rights—
i: to have complaints to which the complaint procedure applies dealt with in accordance with that procedure; and
ii: to have decisions made by the Commission under the complaint procedure in relation to breaches of the Code dealt with in accordance with the review procedure; and
iii: to refer disputes about referable decisions to the dispute scheme.
4: The rights conferred on insured persons by the Code are in addition to any other rights they may have, and do not affect their entitlements and responsibilities under this Act, other legislation, or the general law.
89: Minister to make Code
1: The Minister must make a Code of Insured Persons’ Rights for the purposes set out in section 88
2: For the purpose of doing so, the Minister—
a: must request the Commission to prepare a draft Code and give it to the Minister; and
b: may request the Commission to make amendments to it.
3: The Minister must not make the Code unless satisfied that—
a: adequate public consultation has been undertaken in relation to the draft Code; and
b: interested persons have been given a reasonable opportunity to make submissions on the draft Code, and any submissions have been taken into account.
4: The Code is secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication The maker must publish it in accordance with the Legislation (Publication) Regulations 2021 LA19 s 74(1)﻿(aa) Presentation The Minister must present it to the House of Representatives LA19 s 114 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act.
90: Commission’s obligations in relation to Code
1: In all its dealings with insured persons, the Commission must ensure that its actions—
a: are consistent with the Code; and
b: uphold the rights of insured persons under the Code.
2: The Commission must—
a: publish the Code on the Commission’s website; and
b: make the Code accessible to, and promote awareness of it among, insured persons and the public generally ( see also section 91
3: The obligations imposed on the Commission by the Code are in addition to its other obligations under this Act, other legislation, and the general law.
5: Complaint management procedure
91: Commission must have complaint management procedure
1: The Commission must have a procedure in place for managing complaints by insured persons.
2: The procedure must provide for managing complaints about breaches of the Code.
3: The complaint procedure must be consistent with this subpart, the Code, and any requirements in the regulations.
4: The Commission must publish the complaint procedure, make it accessible, and promote awareness of it, along with the Code ( see section 90
5: The Commission must manage complaints in accordance with the complaint procedure.
6: Review of complaint procedure decisions about breaches of Code
92: Commission must have procedure for review of complaint procedure decisions about breaches of Code
1: The Commission must have a procedure in place for independent persons to review decisions made by the Commission under the complaint procedure in relation to a breach of the Code.
2: The review procedure must—
a: be consistent with this subpart, the Code, and any requirements in the regulations; and
b: provide for decisions to be reviewed in a way that is independent of the Commission (other than its obligations under sections 93 98
3: The Commission must publish the review procedure, make it accessible, and promote awareness of it, along with the Code ( see section 90
4: The Commission must engage persons to be reviewers in accordance with section 98
93: Application for review of decision
1: A person aggrieved by a decision made by the Commission under the internal complaints procedure in relation to a breach of the Code may apply for an independent review of that decision.
2: An application must—
a: be made to the Commission in the way, and within the period, required by the regulations; and
b: include the information required by the regulations.
3: On receiving an application, the Commission must allocate it to a reviewer in accordance with any requirements in the regulations.
4: The Commission must not allocate the application to a reviewer who it is aware has any previous involvement in the matter under review or any other conflict of interest.
5: If, after allocating an application, the Commission becomes aware of any such prior involvement or conflict, it must reallocate the review to another reviewer.
6: If the regulations require a reviewer to transfer the application to another reviewer (for example, because of a conflict of interest), the reviewer must do so.
94: Reviewer must assess application
1: On receiving an application, the reviewer must—
a: assess whether the application—
i: relates to a decision made by the Commission under the complaint procedure in relation to a breach of the Code; and
ii: is made in accordance with section 93(2)
b: if they decide it does meet those criteria, review the decision in accordance with section 95
2: However, a reviewer may reject the application without complying with subsection (1) if—
a: they are satisfied that the application is frivolous or vexatious; or
b: a reviewer has previously assessed and rejected an application relating to the same decision, and the criteria in subsection (1)﻿(a) have not been met; or
c: a review of the decision to which the application relates has previously been conducted.
3: If the reviewer decides that the application does not meet the criteria in subsection (1)﻿(a) or decides to reject the claim under subsection (2), they must notify the applicant and the Commission in writing of that decision and the reasons for it.
4: If the reviewer decides that the application does not meet the criteria in subsection (1)﻿(a) but considers that the application relates to a referable decision, the notice under subsection (3) must explain the applicant’s right to refer disputes about referable decisions to the dispute scheme.
95: Review of decision
The reviewer must carry out the review—
a: within the period set by, and in accordance with any other requirements in, the regulations; and
b: in accordance with the requirements in section 99(2) and (3)
c: otherwise in an informal, timely, and practical manner as the reviewer thinks fit.
96: Report of reviewer
1: After completing the review, the reviewer must prepare a written report setting out—
a: the reviewer’s decision on the application and their reasons for it; and
b: the reviewer’s decision on whether the Commission must provide any of the remedies available under the Code (as required by section 88(3)﻿(b)
c: any other recommendations to the Commission; and
d: any matters required by the regulations; and
e: any other matters the reviewer considers appropriate.
2: The reviewer must give the report to the applicant, the Commission, and any other person as required by the regulations.
3: If the reviewer decides that the Commission should provide a remedy available under the Code and the regulations state that decisions in relation to that remedy are binding, the Commission must provide the remedy.
4: The reviewer and any person to whom the report is given must comply with any requirements in the regulations about the confidentiality of reviewers’ reports.
97: Other proceedings
1: Applying for a review under this subpart does not affect any right any person may have to refer a dispute to the dispute scheme or to commence proceedings in any court or tribunal.
2: However, if proceedings are commenced in a court or tribunal in relation to the matters under review, the review proceedings are stayed until the other proceedings are determined and all appeal rights exhausted (unless the court or tribunal orders otherwise).
98: Commission must engage reviewers
1: The Commission must engage as many persons as it considers necessary to be reviewers.
2: Reviewers must be engaged in accordance with any requirements (including as to the terms of their engagement) in the regulations.
3: The Commission must not engage an individual as a reviewer if they are any of the following:
a: a member of the Commission’s board:
b: a worker of the Commission:
c: a delegate of the Commission or a worker of a delegate:
d: a person specified in the regulations.
4: The Commission must not engage a body corporate as a reviewer unless satisfied that none of the body corporate’s workers who will be involved in carrying out reviews are persons referred to in subsection (3)
5: The Commission must not include in its contract with a reviewer any term or condition that could have the effect, directly or indirectly, of influencing the reviewer in favour of the Commission.
6: A person is a worker person B
99: Powers and duties of reviewers
1: A reviewer has the powers that are reasonably necessary to enable them to carry out their functions under this Act (in addition to the other powers conferred on them by this Act).
2: When performing their functions or exercising their powers, a reviewer must—
a: act independently of the Commission; and
b: exercise due diligence; and
c: act in accordance with the principles of natural justice.
3: A reviewer to whom a review is, or is to be, allocated must inform the Commission of any prior involvement in a matter under review, or any other conflict of interest,—
a: before the application is allocated (if the prior involvement or conflict is known at the time); or
b: as soon as practicable after they become aware of the prior involvement or conflict.
100: Regulations as to fees and costs
1: The regulations may provide for—
a: the payment of fees in respect of a review; and
b: the payments of costs incurred by parties to a review in relation to the review.
2: If the regulations provide for a reviewer to make orders as to costs, any such order may be enforced by a court of competent jurisdiction as if it were a judgment of the court.
7: Resolution of disputes about claims
101: Commission must participate in dispute resolution scheme
1: The Commission must be a member of a dispute resolution scheme approved by the Minister for resolving disputes about the Commission’s decisions on the validity or settlement of claims.
2: If there is no approved dispute resolution scheme, the Commission must establish and operate a scheme with scheme rules made by the Minister under section 103
102: Approval of dispute resolution scheme
1: The Minister may approve a dispute resolution scheme for the purposes of this subpart.
2: The Minister must not approve a scheme unless satisfied that—
a: it is based on the following principles:
i: accessibility:
ii: independence:
iii: fairness:
iv: accountability:
v: efficiency:
vi: effectiveness; and
b: it provides for the resolution of disputes about referable decisions; and
c: adequate public consultation has been undertaken in relation to the scheme.
3: Subsection (2)﻿(c) does not apply to the approval of minor or technical amendments to the scheme.
4: An approval granted under this section is secondary legislation ( see Part 3
5: The Commission must publish on the Commission’s website—
a: a copy of the scheme rules (as amended from time to time); or
b: a link to another Internet site where the rules are published. The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication The maker must publish it in accordance with the Legislation (Publication) Regulations 2021 LA19 s 74(1)﻿(aa) Presentation The Minister must present it to the House of Representatives LA19 s 114 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act.
103: Rules for scheme established by Commission
1: For the purposes of section 101(2)
2: For the purpose of doing so, the Minister—
a: must request the Commission to prepare draft rules and give them to the Minister; and
b: may request the Commission to make amendments to the draft.
3: The Minister must not make rules unless satisfied that—
a: the scheme will meet the criteria set out in section 102(2)
b: adequate public consultation has been undertaken in relation to the draft rules.
4: Subsection (3)﻿(b) does not apply in relation to minor or technical amendments to the rules.
5: Rules made under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication The maker must publish it in accordance with the Legislation (Publication) Regulations 2021 LA19 s 74(1)﻿(aa) Presentation The Minister must present it to the House of Representatives LA19 s 114 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act.
104: Referral of dispute and participation in resolution
1: If the Commission has made a referable decision about a claim, an affected person who disputes the decision may (but is not required to) refer the dispute to the dispute scheme.
2: The Commission is a party to dispute resolution proceedings and must participate in the resolution of the dispute.
3: All parties to the dispute resolution proceedings must comply with the scheme rules.
4: A court of competent jurisdiction may, on application, order a party to the proceedings to comply with the scheme rules.
5: An application to the court may be made by a party to the proceedings or the person conducting the proceedings.
6: In this section,— affected person
a: the insured person for the residential building or residential land that the claim relates to; or
b: any other person who is lawfully entitled to all or part of any building claim entitlement or land claim entitlement payable on the settlement of the claim referable decision
a: under section 59
b: under section 60 but not a decision of a kind specified in the regulations as not suitable for resolution under the dispute scheme.
105: Other proceedings
1: The referral of a dispute to the dispute scheme does not affect any right any person may have to commence proceedings in any court or tribunal.
2: However, if such proceedings are commenced in relation to the matters that are the subject of the dispute resolution proceedings, the dispute resolution proceedings are stayed until the other proceedings are determined and all appeal rights exhausted (unless the court or tribunal orders otherwise).
106: Enforcement of dispute resolution scheme
1: This section applies if a dispute is resolved under the dispute scheme—
a: by an order or other decision of an adjudicator or other decision maker; or
b: by mediation or other process the outcome of which the parties have agreed will be binding.
2: The outcome of the dispute resolution proceedings—
a: is binding on the parties to the proceedings; and
b: may be enforced by a court of competent jurisdiction.
3: An application to the court may be made by—
a: a party to the proceedings; or
b: if subsection (1)﻿(a) applies, the adjudicator or other decision maker.
4: If subsection (1)﻿(a) applies, an order or a decision that requires the payment of money may be enforced as if it were a judgment of the court.
107: Appeals
1: A person (including the Commission) aggrieved by a decision referred to in section 106(1)﻿(a)
2: An appeal must be brought—
a: in accordance with the rules of the court; and
b: within—
i: 20 working days after the date of the decision; or
ii: any further time allowed by the court (on application made before or after that period expires).
4: Natural Hazard Fund and levy
1: Natural Hazard Fund
108: Natural Hazard Fund
1: The Natural Disaster Fund under the Earthquake Commission Act 1993
2: The purpose of the Fund is to provide for payment of claim settlement costs and the other amounts referred to in section 111
3: The primary sources of funding for the Fund are—
a: the levy; and
b: earnings from the investment of the Fund; and
c: payments made by the Minister (which are required by section 112 section 111
109: Fund owned and managed on behalf of Crown
1: All assets in the Fund are owned by the Commission on behalf of the Crown.
2: The Commission is not a trustee, or a constructive trustee, in relation to the performance of its functions or any other matter.
3: The Fund is managed by the Commission on behalf of the Crown.
4: All money payable into the Fund must be paid to the credit of a bank account established under section 158(1) section 65U
5: All money owing in respect of the Fund is recoverable by the Commission in a court of competent jurisdiction as a debt due to the Commission.
6: The Commission must comply with any requirements in the regulations relating to how payments out of the Fund are to be made.
110: Amounts to be paid into Fund
The following must be paid into the Fund:
a: levy payments under subpart 2
b: money payable by the Minister under section 112 113
c: money received from the investment of the Fund under section 115
d: money received from reinsurance or other risk transfer products referred to in section 129(d)
e: fines imposed for offences against this Act:
f: any other money lawfully payable into the Fund.
111: Amounts to be paid out of Fund
1: The following must be paid out of the Fund:
a: claim settlement costs:
b: expenses and capital expenditure incurred by the Commission in performing its functions under any of paragraphs (a) to (d), (f), and (g) of section 129
c: expenses and capital expenditure incurred by the Commission in undertaking any other activity in the performance of its functions if the Commission believes on reasonable grounds that the activity has the potential to—
i: provide a benefit to insured persons (whether or not the activity also has the potential to provide a benefit to persons who are not insured persons); or
ii: reduce the future cost of providing natural hazard cover:
d: expenses and capital expenditure incurred by the Commission in undertaking activities to which subsection (3)﻿(a) applies:
e: repayments (with any applicable interest) of—
i: amounts paid into the Fund under section 112
ii: amounts required to be repaid under section 114
f: refunds payable under section 119 120
2: If an expense or a capital expenditure is incurred in undertaking an activity only part of which is within the scope of subsection (1), only the part of the expense or capital expenditure that is attributable to that part of the activity must be paid out of the Fund.
3: When conferring a function referred to in section 129(h)﻿(ii)
a: from the Fund; or
b: out of money—
i: appropriated by Parliament for that purpose; and
ii: provided under a service agreement entered into under section 132
4: The Minister may only choose the option specified in subsection (3)﻿(a) if the Minister believes on reasonable grounds that the activity has the potential to—
a: provide a benefit to insured persons (whether or not the activity also has the potential to provide a benefit to persons who are not insured persons); or
b: reduce the future cost of providing natural hazard cover.
5: No payment may be made out of the Fund other than those permitted by this section.
112: Minister must make payments into Fund
1: If the assets of the Fund are not sufficient to pay the amounts forecast to be due and payable out of the Fund under section 111
2: The amount payable by the Minister is to be paid—
a: by way of loan or grant; and
b: on terms (including as to the payment of interest) that the Minister considers appropriate; and
c: out of public money and without further appropriation than this section.
113: Minister may make additional payments into Fund
1: The Minister may pay into the Fund money that is additional to that required under this Act.
2: The amount is to be paid—
a: on terms (including as to the payment of interest) that the Minister considers appropriate; and
b: out of money appropriated by Parliament for that purpose.
114: Repayment of amounts paid by Minister
1: The Minister may, in writing, require the Commission to repay out of the Fund any amount paid into the Fund by the Minister.
2: The amount is to be repaid on terms (including as to the payment of interest) that the Minister considers appropriate.
3: However, the Minister cannot require an amount to be repaid if making the repayment as required would result in the Minister being required to make a payment into the Fund under section 112
4: The Commission must comply with a requirement made by the Minister, unless doing so would result in the Minister being required to make a payment into the Fund under section 112
5: Before requiring repayment under this section, the Minister must consult the Commission.
6: This section—
a: does not apply to amounts paid into the Fund by way of grant under section 112 section 16
b: applies to all other amounts paid into the Fund by the Minister, whether under section 112 113 Earthquake Commission Act 1993
115: Investment of Fund
1: The Commission is responsible for investing the Fund.
2: The Commission must invest the fund having regard to the amounts required to be paid out of the Fund under section 111
3: Subject to subsection (2), the Commission must invest the Fund as required by—
a: any direction by the Minister under section 103
b: the funding and risk management statement ( see section 136
4: If there is a conflict between a direction referred to in subsection (3)﻿(a) and the funding and risk management statement, the direction prevails.
5: Subject to subsections (2) and (3), the Commission must invest the Fund on a prudent, commercial basis that is consistent with—
a: best-practice portfolio management; and
b: maximising return without undue risk to the Fund as a whole; and
c: avoiding prejudice to New Zealand’s reputation as a responsible member of the world community.
6: Section 100
2: Levy
116: Levy payable for natural hazard cover
1: A levy is payable in respect of a residential building that is insured under a fire insurance contract.
2: The rate of the levy is the rate set out in, or determined using the method set out in, the regulations.
3: The levy is payable by the fire insurer.
4: If there are 2 or more fire insurance contracts for a residential building, the liability for the levy is to be apportioned between the insurers in accordance with any requirements in the regulations. Guidance note
If the fire insurer is an overseas insurer, any insurance intermediary and the insured person may also be liable to pay the levy under section 121
117: Payment of levy
1: A fire insurer must pay the levy to the Commission—
a: within 2 months after the end of the month in which the fire insurance contract is entered into, or within any other period set out in the regulations; and
b: in the way required by the regulations.
2: When making the payment, the fire insurer must give to the Commission a statement, certified by an officer or agent of the insurer, that according to the insurer’s records and to the best of the person’s knowledge and belief, the payment is correct.
3: A person who intentionally fails to comply with this section—
a: commits an offence; and
b: is liable on conviction,—
i: in the case of an individual, to imprisonment for a term not exceeding 2 months or a fine not exceeding $25,000 (or both); and
ii: in any other case, to a fine not exceeding $50,000.
118: Insured person must pay amount of levy to fire insurer
1: On entering into a fire insurance contract, the insured person must pay an amount equal to the amount of the levy to the fire insurer in accordance with the fire insurance contract.
2: The amount payable is a debt due by the insured person to the fire insurer and is recoverable by the fire insurer.
3: If, before the amount is paid, another person becomes the insured person (or becomes 1 of the persons who are together the insured person), that person also becomes liable for the outstanding amount.
4: If 2 or more persons are liable for an amount under this section, they are jointly and severally liable for the amount.
119: Waiver or refund of levy if amount not recoverable from insured person
The Commission may waive a fire insurer’s obligation to pay all or part of the levy in relation to a fire insurance contract, or refund an amount paid, if satisfied that,—
a: at the time the insurer is required by section 117 section 118
b: the fire insurer is unlikely to be able to recover that amount.
120: Unpaid or overpaid levy
1: Any unpaid levy is recoverable by the Commission under section 109(5)
2: The Commission may refund any overpayment of the levy to the fire insurer.
3: The fire insurer must in turn refund the same amount to the insured person (unless the insured person has not complied with section 118
121: Liability for levy if overseas insurer
1: This section applies if a fire insurer—
a: is not a licensed insurer; and
b: does not carry on insurance business in New Zealand; and
c: does not carry on business in New Zealand.
2: If the contract is negotiated (directly or indirectly) by an insurance intermediary who carries on business in New Zealand,—
a: the insurance intermediary is liable (jointly and severally with the fire insurer) to pay the levy; and
b: sections 117 to 120 152 153
3: If the contract is negotiated (directly or indirectly) by an insurance intermediary who does not carry on business in New Zealand, the insurance intermediary and the insured person are liable (jointly and severally with each other and the fire insurer) to pay the levy.
4: If the contract is not negotiated by an insurance intermediary, the insured person is liable (jointly and severally with the fire insurer) to pay the levy.
5: If the insured person is liable under subsection (3) or (4),—
a: sections 117(1) and (3) 120(1) and (2)
b: section 118
6: For the purposes of this Act, a fire insurance contract to which this section applies is to be treated as being governed by New Zealand law.
7: In this section,— carry on business section 332 carry on insurance business in New Zealand section 8 licensed insurer section 6(1) insurance intermediary section 2(1)
122: Confidentiality of levy information
1: The Commission, a member of the Commission’s board, or a worker must not disclose information obtained under section 117
a: for the purposes of this Act; or
b: as permitted by subsection (2).
2: The Commission may disclose the amount of levy payments received and cover provided under this Act in a manner that does not enable the amounts paid by, or attributable to, a particular fire insurer to be identified.
3: A board member or worker who intentionally discloses information in contravention of subsection (1)—
a: commits an offence; and
b: is liable on conviction to a fine not exceeding,—
i: in the case of an individual, $25,000; and
ii: in any other case, $50,000.
4: In this section, worker
123: Levy amount to be stated separately
In any invoice, demand, or statement of account relating to a fire insurance contract, the fire insurer must set out the amount of the levy separately from any premium or other amount.
124: Brokerage not to be charged
No person may require payment by an insured person of any brokerage, commission, or other fee in respect of natural hazard cover, the levy, or an amount payable under section 118
5: Administration and enforcement
1: Toka Tū Ake – Natural Hazards Commission
125: Toka Tū Ake – Natural Hazards Commission
The Earthquake Commission under the Earthquake Commission Act 1993
126: Commission is Crown entity
1: The Commission is a Crown entity for the purposes of section 7
2: That Act applies to the Commission except to the extent that this Act expressly provides otherwise.
127: Membership of Commission’s board
The board of the Commission consists of at least 5, and not more than 9, members appointed by the Minister under section 28
128: Objectives of Commission
1: The Commission’s primary objective is to reduce the impact of natural hazards on people, property, and the community.
2: The Commission’s more specific objectives are—
a: to administer natural hazard cover, in particular by managing and settling claims, in a fair and timely manner in accordance with this Act (including the Code):
b: to contribute to the management of the financial risk to the Crown of providing natural hazard cover by managing the Fund, collecting the levy, and arranging reinsurance or other risk transfer products:
c: to contribute, primarily through the performance of its functions under section 129(e) and (f)
i: improved awareness and understanding of matters relating to natural hazards, including—
A: the impacts of natural hazards; and
B: damage as a result of natural hazards, including how that damage may be prevented or reduced; and
C: natural hazard cover and the operation of this Act:
ii: improved natural hazard risk management:
iii: improved readiness for, resilience to, and recovery from, natural hazards, including by reducing the cost of recovery from natural hazards:
d: to facilitate the arrangement by the Crown of reinsurance or other risk transfer products in respect of Crown risks beyond those covered in this Act.
129: Functions of Commission
The Commission has the following functions:
a: to administer natural hazard cover, in particular by managing and settling claims:
b: to manage the Fund, including by investing the Fund, in accordance with this Act:
c: to collect the levy in accordance with this Act:
d: to arrange reinsurance or other risk transfer products in respect of all or part of natural hazard cover:
e: to facilitate research and education, and to contribute to the sharing of information, knowledge, and expertise (with the Crown, public and private entities, and the public generally), including in relation to—
i: natural hazards and their impacts:
ii: damage to residential buildings, residential land, and other property as a result of natural hazards, including how that damage might be prevented or reduced:
iii: community resilience to natural hazards:
iv: natural hazard risk management:
v: planning for, and recovering from, natural hazards:
vi: natural hazard cover and the operation of this Act:
f: to support the Minister in performing the Minister’s functions, including by providing information, knowledge, and expertise (whether in relation to the matters set out in paragraph (e) or in relation to other matters):
g: to monitor compliance with this Act, investigate possible offences against this Act, and enforce this Act:
h: any other functions conferred on it—
i: under this or any other Act; or
ii: by the Minister under section 112 Guidance note
There is also a duty on the Minister to determine how a function conferred under paragraph (h)﻿(ii) will be funded ( see section 111
130: Delegation of claims management functions and powers
1: The Commission may delegate any of its functions and powers—
a: under subparts 1 2
b: under those subparts, other than sections 57(1)﻿(b)﻿(ii) and (iii)
2: The power of delegation in subsection (1) is in addition to the power in section 73
3: However, a delegation made under subsection (1) has effect as if it had been made under section 73
4: To avoid doubt, a delegation may be made to any person (whether an individual, a body corporate, or otherwise).
131: Directions by Minister
1: Before giving a direction, the Minister must (if practicable) consult the persons likely to be affected by the direction.
2: In giving a direction in relation to the Commission’s functions under section 129(b) and (d)
a: the purposes of this Act and natural hazard cover set out in sections 3 4
b: the Crown’s current and possible future overall financial position, having regard to the Minister’s obligations under section 112
c: the Crown’s current and possible future overall financial position, taking into account the interests of the Crown in the entities referred to in section 27(3)
d: the Fund’s current and possible future overall financial position.
3: In a direction in relation to the Commission’s functions under section 129(b) and (d)
4: In this section, direction section 103
2: Financial and accountability matters
132: Service agreement
1: This section applies—
a: in relation to goods and services provided by the Commission to any person (including the Crown) in the performance of the Commission’s functions; and
b: if the expenses and capital expenditure incurred in providing the goods and services are not payable out of the Fund under section 111
2: The Minister and the Commission may enter into 1 or more agreements setting out—
a: the goods and services to be provided; and
b: which of the Commission’s functions enables the Commission to provide the goods and services; and
c: the terms and conditions on which the Commission must or may provide the goods and services; and
d: the payment to be made by the Minister to the Commission for the provision of the goods and services.
3: Payments by the Minister to the Commission under the agreement must be made out of money appropriated by Parliament for that purpose.
4: Before providing goods or services to which this section applies, the Commission must take reasonable steps to ensure that there is an agreement in place under this section requiring the Minister to pay all expenses and capital expenditure incurred by the Commission in providing those goods or services.
5: The Commission must publish the agreement on the Commission’s website.
6: However, the Commission is not required to publish an agreement (or part of it) if satisfied on reasonable grounds that good reason for withholding the agreement (or part of it) would exist under the Official Information Act 1982
133: Financial statements
1: The Commission’s financial statements required to be prepared under section 154
2: The Commission must keep the financial records of the Fund separately from the Commission’s own financial records.
3: The Commission may appoint a qualified auditor (as defined in section 35 see section 14
4: The Commission may appoint the additional auditor only with the approval of the Minister and after consulting the Auditor-General.
134: Financial settings and levy settings
1: The financial settings
a: section 31(2)﻿(b)
b: sections 35(2)﻿(b) 36(2)﻿(a)﻿(ii) and (b) 37
c: section 39(2)﻿(b)﻿(i) and (ii)
d: section 43(1)﻿(b)﻿(ii) and (c)﻿(ii)
2: The levy settings section 116
135: Orders in Council to amend financial settings
1: The Governor-General may, by Order in Council made on the recommendation of the Minister after carrying out a review under section 139 section 134
2: However, the Order in Council must not amend section 35 36 37 43
3: The Order in Council may also make consequential amendments to Schedule 1
4: An Order in Council made under this section is secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act.
136: Funding and risk management statement
1: At least once every 5 years the Minister must make a funding and risk management statement for the next 5 years.
2: The purpose of a funding and risk management statement is to—
a: support public confidence in the costs of claims being met by providing transparency about how those costs will be shared between the Fund and the Crown; and
b: provide transparency about how financial settings and levy settings are determined; and
c: communicate the Crown’s financial strategy in relation to the funding of those costs and its impact on the financial settings and levy settings; and
d: set out requirements relating to the investment of the Fund that the Commission is required to comply with under section 115(3)﻿(b)
e: provide guidance to the Commission in performing its functions under section 129(b) and (d)
137: Making funding and risk management statement
1: For the purpose of preparing the funding and risk management statement, the Minister must—
a: review the financial settings and levy settings in accordance with section 139
b: consult—
i: the Commission; and
ii: any other persons as the Minister considers appropriate.
2: A funding and risk management statement remains in force until it is replaced by a new statement (even if that results in the statement remaining in force for more than 5 years).
3: As soon as practicable after a funding and risk management statement is made,—
a: the Minister must present it to the House of Representatives; and
b: the Commission must make it available on the Commission’s website.
138: Content of funding and risk management statement
A funding and risk management statement must set out the following:
a: the financial settings and levy settings at the time the statement is made and any changes proposed to be made to them:
b: financial projections showing estimates of the cost of providing natural hazard cover, the amount in the Fund, and the financial implications of any changes to the financial settings or levy settings:
c: the methodology, assumptions, and forecasts used in preparing the financial projections:
d: the policy considerations taken into account by the Minister in conducting the review and preparing the statement:
e: the current and projected allocation of risk between the Crown and the Fund:
f: the Government’s strategy to reduce or finance any deficiency in the Fund:
g: a copy of any current directions or letters of expectation relating to the Commission’s functions under section 129(b) and (d) Crown Entities Act 2004
139: Review of financial settings and levy settings
1: The Minister must review the adequacy and appropriateness of the financial settings and levy settings—
a: when required for the purposes of section 137
b: at any other time the Minister considers appropriate.
2: In carrying out a review, the Minister—
a: may have regard to the matters set out in section 140
b: must consult the Commission; and
c: may consult any other persons as the Minister considers appropriate.
3: When carrying out a review under subsection (1)﻿(b), the Minister must also review, and if appropriate update, the funding and risk management statement if—
a: the review under subsection (1)﻿(b) will be completed more than 12 months before the end of the 5-year period covered by the current funding and risk management statement; and
b: as a result of the review, the Minister proposes to recommend the making of either or both of the following:
i: an Order in Council under section 135
ii: an amendment to the regulations to make a material change to the levy settings.
140: Matters Minister may have regard to
In carrying out the review, the Minister may have regard to the following:
a: the purposes of this Act and natural hazard cover set out in sections 3 4
b: the current financial settings and levy settings:
c: the impact that any change to the current financial settings and levy settings may have on insured persons, fire insurers, the Crown, and other persons likely to be affected by the change:
d: the Crown’s current and possible future overall financial position, including—
i: the Minister’s obligations under section 112
ii: the Crown’s interests in the entities referred to in section 27(3)
e: the current and possible future financial position of the Fund, including—
i: the amount in the Fund; and
ii: any amounts that are forecast to be paid from the Fund under section 111(1)
iii: the Commission’s risk modelling and known and expected claims; and
iv: the Commission’s ability to arrange reinsurance or other risk transfer products:
f: the current funding and risk management statement:
g: the impact that any change to the financial settings and levy settings may have on the availability, affordability, and uptake of catastrophe insurance for residential buildings:
h: the benefit to the public of minimising volatility in the financial settings and levy settings:
i: any other matter the Minister considers appropriate.
3: Information and disclosure
Collection and disclosure of information by Commission
141: Purposes for which Commission may collect information
1: The Commission may collect information (including from authorised persons) for the purpose of performing its functions under this Act.
2: If property-related information is collected for that purpose, it is taken to have also been collected for the purpose of making the information available (including to the public).
3: This section does not limit the Privacy Act 2020
4: In this section, property-related information
a: natural hazard damage to the property; and
b: any claims made under this Act in relation to the property (including information about the assessed cost of replacing or reinstating damaged property, reinstatement methods, and settlement amounts).
142: Disclosure of information if serious threat to life, health, or safety
1: The Commission may disclose (including to the public) any information in its possession if it believes on reasonable grounds that doing so is necessary to prevent or lessen a serious threat to public health or public safety or to the life or health of any individual.
2: This section does not limit the Privacy Act 2020
3: In this section, serious threat section 7(1) Information-gathering powers
143: Authorising persons to exercise information-gathering powers
1: The Commission may authorise an individual to exercise any of the powers under sections 144 146 147 149
2: The authorisation must—
a: be made in writing; and
b: state that it is made under this section; and
c: set out the following:
i: the name of the individual:
ii: the powers they are authorised to exercise:
iii: any conditions or limitations on the exercise of the powers:
iv: the purpose for which they may exercise them:
v: the duration of the authorisation (which may be until it is revoked).
144: Power to require information
1: An authorised person may, by written notice, require a person (the recipient
a: give to an authorised person, or produce for them to inspect, any information, document, or other thing that the Commission reasonably needs for the purpose of performing its functions; and
b: allow an authorised person to inspect and examine, and to copy or make other records of, the information, document, or thing.
2: However, this section cannot be used to obtain information, documents, or things from an insured person for the purposes of assessing, deciding, or settling a claim made by the person ( see instead section 58
3: The notice may relate to information, documents, or other things that are within the recipient’s possession or control or that later come into their possession or control.
4: The notice must specify a reasonable period within which it must be complied with.
5: The notice may do 1 or more of the following:
a: specify the form and manner in which information, documents, or things must be given or produced:
b: require the insured person to also give a statutory declaration as to the truth of information given by the person:
c: otherwise specify how anything required by the notice must be done.
6: The regulations may also impose requirements of the kind referred to in subsection (5).
7: The recipient of a notice has the same privileges in relation to things required by the notice as a witness has in proceedings before a court. Guidance note
The privileges of a witness include the privilege against self-incrimination and the other privileges set out in subpart 8
145: Failure to comply
The recipient of a notice under section 144
a: commits an offence; and
b: is liable on conviction to a fine not exceeding,—
i: in the case of an individual, $5,000; and
ii: in any other case, $25,000. Guidance note
Giving misleading information is an offence under section 154
146: Power of entry
1: An authorised person may, at any reasonable time, enter any land, building, or place (a place of entry
2: An authorised person who enters a place of entry in accordance with subsection (1) may—
a: conduct examinations, tests, inquiries, and inspections; and
b: take photographs and measurements and make sketches and recordings.
3: For the purposes of subsections (1) and (2), an authorised person may—
a: be accompanied and assisted by any other person; and
b: bring onto the place of entry any equipment necessary to carry out their functions.
4: Before the authorised person enters the place of entry, unless it is impracticable to do so, the occupier and the owner must be given reasonable notice (orally or in writing) of the intended entry, stating—
a: that entry to the place of entry is authorised by this section; and
b: the purpose for which entry is required; and
c: how and when entry is to be made; and
d: the Commission’s telephone number, email address, or physical or postal address.
5: If notice is not given before entry and the occupier is not present when entry occurs, the occupier must be given written notice of the entry as soon as practicable after it occurs, stating—
a: that entry to the place of entry is authorised by this section; and
b: the purpose for which entry was made; and
c: how and when entry was made; and
d: the authorised person’s identity; and
e: the authorised person’s telephone number, email address, or physical or postal address; and
f: what was done at the place of entry.
6: An authorised person entering the place of entry must—
a: have with them evidence of their identity and their authorisation under section 143
b: produce that evidence to the occupier,—
i: if practicable, when first entering the place of entry; and
ii: subsequently, if reasonably requested by the occupier.
7: An authorised person must not exercise a power under this section to obtain information if the Commission may reasonably obtain the information by other means.
8: This section does not apply in circumstances in which —
a: section 147 149
b: a person enters a place of entry with the consent of an occupier.
147: Power to enter home or marae
1: An authorised person may only enter a home, a marae, or a building associated with a marae (a place of entry
a: with the consent of an occupier; or
b: under a warrant issued under subsection (2).
2: An authorised person may apply to an issuing officer (as defined in the Search and Surveillance Act 2012
3: The issuing officer may issue a warrant if satisfied that there are reasonable grounds to believe that there is information in the place of entry that the Commission—
a: reasonably needs for the purpose of performing its functions; and
b: may not reasonably obtain by other means.
4: An authorised person who enters a place of entry in accordance with subsection (1)﻿(b) may, for the purpose of obtaining that information, exercise the powers specified in section 146(2) and (3)
5: Before the authorised person enters the place of entry in accordance with subsection (1)﻿(b), the occupier must be given reasonable notice (orally or in writing) of the intended entry, unless the warrant allows otherwise.
6: A notice under subsection (5) must state—
a: that entry to the place of entry is authorised by a warrant issued under this section; and
b: the purpose for which entry is required; and
c: how and when entry is intended to be made.
7: An authorised person entering the place of entry in accordance with subsection (1)﻿(b) must—
a: have with them—
i: a copy of the warrant issued under this section; and
ii: evidence of their identity; and
iii: evidence of their authorisation under section 143
b: produce the items described in paragraph (a) to the occupier,—
i: if practicable, when first entering the place of entry; and
ii: subsequently, if reasonably requested by the occupier. Guidance note
Subpart 3
148: Report on exercise of powers by authorised person required
If an authorised person exercises a power under section 146 147
a: the reasons for exercising it; and
b: the circumstances in which it was exercised; and
c: an account of what was done at the place of entry.
149: Power to enter if investigating offence
1: An authorised person must not enter any land, building, or place for the purpose of—
a: ascertaining whether an offence against this Act has been committed; or
b: obtaining evidential material in relation to an offence or a suspected offence against this Act,— except with the consent of an occupier or under a search warrant.
2: An authorised person may apply to an issuing officer (as defined in the Search and Surveillance Act 2012
3: The issuing officer may issue a warrant if satisfied that there are reasonable grounds to believe that—
a: an offence against this Act has been, is being, or is intended to be committed; and
b: there is evidential material in relation to the offence on or in the land, building, or place. Guidance note
Part 4 sections 118 119 subpart 8
150: Obstructing authorised persons
1: A person must not intentionally obstruct, resist, hinder, or deceive an authorised person in the exercise of a power under section 144 146 147 149
2: A person who fails to comply with this section—
a: commits an offence; and
b: is liable on conviction to a fine not exceeding,—
i: in the case of an individual, $25,000; and
ii: in any other case, $50,000.
3: However, the person has the same privileges in relation to the exercise by the authorised person of their powers as a witness has in proceedings before a court.
151: Restrictions on recording or disclosing information
An authorised person must not make a record or copy of, or disclose, information obtained in the exercise of a power under section 144 146 147 149
a: to the Commission; or
b: for a purpose for which a power may be exercised that is set out in the authorised person’s authorisation under section 143(2)﻿(c)﻿(iv)
c: for the purposes of any legal proceedings; or
d: if required or permitted to do so under this or any other Act. Fire insurers’ information obligations
152: Record keeping
1: A fire insurer must keep records of their fire insurance contracts.
2: For each contract, the records must include the following:
a: the name of the insured person:
b: details identifying the building and dwellings insured under the contract:
c: if the contract insures more than 1 dwelling,—
i: the number of insured dwellings; and
ii: if the insured dwellings are in more than 1 building, the number of them in each building:
d: the date on which the insurance cover started and each renewal date:
e: the information necessary to enable the building cap under sections 35 to 37
f: the amount and date of payment of each levy payment made in respect of the contract:
g: details of any property that is specifically identified and excluded from cover under the contract but would be part of the residential building if it were covered by the contract:
h: any other information required by the regulations.
3: The records must be kept—
a: for 7 years after the expiry of the contract, or any other period required by regulations; and
b: in the way required by the regulations.
4: However, if a claim has been made, the records for the fire insurance contract must be kept for 25 years after the expiry of the contract.
5: A fire insurer who fails, without lawful excuse, to comply with this section—
a: commits an offence; and
b: is liable on conviction to a fine not exceeding,—
i: in the case of an individual, $5,000; and
ii: in any other case, $25,000.
153: Auditing and reporting to Commission
1: A fire insurer must comply with any requirements in the regulations relating to—
a: the auditing of the information the fire insurer is required to keep under this Act; and
b: giving reports or other information about the fire insurer’s contracts of fire insurance to the Commission.
2: A fire insurer who fails, without lawful excuse, to comply with this section—
a: commits an offence; and
b: is liable on conviction to a fine not exceeding,—
i: in the case of an individual, $5,000; and
ii: in any other case, $25,000. Offences about information generally
154: Misleading information
1: A person must not give misleading information to the Commission or an authorised person.
2: A person who fails to comply with this section—
a: commits an offence; and
b: is liable on conviction to a fine not exceeding,—
i: in the case of an individual, $25,000; and
ii: in any other case, $50,000.
3: In this section, misleading information
155: Misleading information or damaging required records
1: A person must not intentionally—
a: include misleading information in a required record; or
b: alter a required record so that information in it becomes misleading information.
2: A person must not intentionally damage or destroy a required record.
3: A person who fails to comply with this section—
a: commits an offence; and
b: is liable on conviction to a fine not exceeding,—
i: in the case of an individual, $25,000; and
ii: in any other case, $50,000.
4: In this section,— misleading information required record Attribution of liability
156: Meaning of senior manager and worker
1: This section applies for the purposes of sections 157 158
2: A person ( person A senior manager person B
a: person A is a director (as defined in section 6(1)
b: person A occupies a position in relation to person B that allows person A to exercise significant influence over the management or administration of person B (for example, a chief executive or a chief financial officer):
c: person A is otherwise able, whether directly or through 1 or more interposed entities, to exercise significant influence over the management or administration of person B.
3: A person ( person A worker person B
157: Attribution of offence committed by senior manager or worker
1: If a senior manager or worker of another person ( person B
2: This section does not apply if person B is the Commission.
158: Attribution of state of mind of senior managers and workers
1: This section applies in a prosecution for an offence against this Act if—
a: the prosecution relates to conduct engaged in by a person ( person B
b: it is necessary to establish the state of mind of person B.
2: It is sufficient to show that a senior manager or worker of person B, acting within the scope of their actual or apparent authority, had that state of mind.
3: However, this section does not apply if person B is an individual.
6: Miscellaneous provisions
159: Regulations
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations—
a: providing for anything that this Act says may or must be provided for by regulations:
b: exempting any class of residential building or residential land from the application of any provision of this Act or the regulations:
c: providing for anything incidental that is necessary for carrying out, or giving full effect to, this Act.
2: The Minister must not recommend the making of regulations in relation to the review procedure ( see subpart 6
3: Subsection (2) does not apply to regulations that are minor or technical in nature.
4: Regulations made under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act.
160: Orders in Council to amend Schedule 2
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, amend Schedule 2
2: However, an Order in Council cannot amend Schedule 2
3: The Minister must not recommend that an Order in Council be made unless satisfied that the amendment is necessary or desirable to do 1 or more of the following:
a: remove ambiguity about whether property of a particular kind is or is not excluded property:
b: modernise the kinds of property that are or are not excluded property (for example, as a consequence of technological changes):
c: make other changes of a minor or technical nature.
4: An Order in Council made under this section is secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act.
161: Commission may approve forms
1: The Commission may approve forms for use under this Act.
2: If a form is approved for doing a thing, the thing must be done using that form.
162: Repeal and revocation
1: The Earthquake Commission Act 1993
2: The Earthquake Commission Regulations 1993 2024-07-01 Earthquake Commission Act 1993 Earthquake Commission Regulations 1993
163: Consequential amendments
Amend the enactments specified in Schedule 3 2024-07-01 Canterbury Earthquakes Insurance Tribunal Act 2019 Civil Defence Emergency Management Act 2002 Crown Entities Act 2004 Fire and Emergency New Zealand Act 2017 Income Tax Act 2007 Insurance (Prudential Supervision) Act 2010 Ombudsmen Act 1975 Privacy Act 2020 Search and Surveillance Act 2012