Insurance firms refuse new policies after quake

A large crack in the road is blocked off by cones at King Edward Wharf in Wellington.  (Photo by...
A large crack in the road is blocked off by cones at King Edward Wharf in Wellington. (Photo by Hagen Hopkins/Getty Images)
Insurance companies are refusing policies to new customers in central New Zealand following Sunday's magnitude-6.5 earthquake.

Insurance Council of New Zealand insurance manager John Lucas said some of the council's 27 member insurers had stopped taking on new business, which was a normal process following a big earthquake event and also happened a number of times during the Canterbury earthquakes.

The new business stand-down period could last for weeks, Mr Lucas said. "It's basically until the insurers understand what's happened. [While] they're not accepting new business, they're still honouring renewals."

The stand-down was in place for all areas affected by the earthquake - from Marlborough to as far as Taupo, Mr Lucas said.

It was too early to know how many claims would be received as a result of the earthquake, he said.

"It's caused some damage that we're aware of. It'll be days before building owners will even know what damage they've got to their building and it may be weeks before insurers know what that is in dollar terms," Mr Lucas said.

EQC spokesman Bruce Emson said people who had suffered damage to their property or contents from Sunday's earthquake had until October 21 to lodge a claim for damage.

EQC covers earthquake damage to homes up to $100,000 and contents up to $20,000 for customers with a fire insurance contract with their insurance company.

While it was too early to say how many claims EQC would receive, by yesterday they had already received over 350 - mostly for minor damage or damaged contents, Mr Emson said.

Tower chief executive officer David Hancock said calls received so far were for relatively minor damage to homes and contents including broken glass and smashed crockery.

Prime Minister John Key said today that although there were no funds in the Earthquake Commission's coffers, in principle, New Zealand could afford to pay for the damage.

Insurance Brokers Association chief executive Gary Young said the weekend's earthquakes would not give insurance providers another reason to increase premiums.

"I don't see that the premiums are going to alter because they've already been altered following Christchurch."

If the weekend's earthquakes had created the same levels of damage as seen in Christchurch there could have been scope for premiums to rise. However, that was not the case, Mr Young said.

"Obviously they're going to be paying out a lot of claims but that's part of what they do and that's why they charge the premiums they've been charging," he said.

- Brendan Manning of APNZ

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