EQC faces more big bills in initial High Court ruling
By Paul McBeth
Sept. 2 (BusinessDesk) – The Earthquake Commission faces a bigger bill from the Canterbury earthquakes just days after the government lifted the value of its likely exposure to the natural disasters to $7.1 billion.
The High Court in Wellington today shot down a bid by the EQC to limit its exposure to one payout of up to $100,000 a year, saying “continuity of cover is not achieved.” High Court Chief Judge Helen Winkelmann and Judges Alan Mackenzie and Forrest Miller preferred allowing separate claims for subsequent events, provided they didn’t invalidate one another.
The bench reserved its final judgement to allow further consideration from the parties involved.
The judges’ preliminary stance will mean the EQC will continue to provide cover so long as the insurance contract is in force for each event of natural disaster damage. Subsequent events won’t reduce the amount of cover available, though they trump an initial claim if it became redundant.
Still, the EQC will have the right to charge an additional levy from the date of the first claim.
The ruling comes after Finance Minister Bill English pushed out the estimated cost of the quakes by $4 billion, effectively wiping out the EQC’s $6 billion Natural Disaster Fund.
That leaves the government on the hook for any extra cost, and has already seen this year’s fiscal deficit blow out to an expected $18 billion for the 12 months ended June 30.