Government’s new land categorisation for regions impacted by recent severe weather events

Land category definitions and examples 

Category 

Definitions 

Examples 

1 

Repair to previous state is all that is required to manage future severe weather event risk. 

Minor flood damage to repair but no need for significant redesign/retrofitting. 

2C (Community) 

Community level interventions are effective in managing future severe weather event risk 

Local government repairs and enhances flood protection schemes to adequately manage the risk of future flooding events in the face of climate change effects. 

2P (Property) 

Property level interventions are needed to manage future severe weather event risk, including in tandem with community level interventions. 

Property specific measures are necessary. For example, improved drainage, raising houses is necessary. Benefits accrue to property owners, but some may face affordability issues. 

2A (further assessment required) 

Potential to fall within 2C/2P but significant further assessment required. 

Interventions may be required/possible but insufficient information to provide initial categorisation (these may subsequently move between ‘2’ categories or to categories 1 / 3). 

3 

Future severe weather event risk cannot be sufficiently mitigated. In some cases, some current land uses may remain acceptable, while for others there is an intolerable risk of injury or death. 

In the face of enhanced climate risks the property may face unacceptable risk of future flooding. Other property could be subject to unstable land that poses an ongoing risk. 

Land categories and impact on a claim and ongoing insurance  

Category 

What does this mean for my claim? 

What does this mean for my ongoing insurance? 

1 

• No impact to claim, claim will continue to progress as normal. 
• Insurance pays for physical damage from the event, up to the sum insured or any other policy limits and benefits that may apply. 

• Home/contents insurance will remain available, no changes to terms expected. At renewal, decisions are based the same as everywhere in NZ on claims frequency, changes to risk and the insurer’s risk appetite, which may include more granular rates being applied. 
• Assumes repairs are completed. 

2C (Community) 

• No impact to claim, claim will continue to progress as normal. 

• Insurers will continue to support communities while wide scale interventions are worked through. 
• Should these works be deferred or be shown to have not sufficiently mitigated the risks, insurers may re-evaluate ongoing cover. 
• There could be a variety of approaches from insurers. Some will continue with existing terms, some may place new risks under more scrutiny than existing customers, and others, at renewal time, may be looked at on a case-by-case basis.  
• Depending on the level of risk, normal underwriting levers would be applied. For example, price, excess, or exclusion of some hazards until preventative work has been completed by the relevant council(s). 

2P (Property) 

• No impact to claim, claim will continue to progress as normal. 
• Insurance pays for physical damage from the event up to the sum insured or any other policy limits and benefits that may apply. 
• There is no cover available for the costs of planning or implementing improvements or changes to design to prevent future damage. 
• Physical damage costs would be likely cash settled to allow homeowner to make informed decisions on use of funds. 
• A cash settlement (from the physical damage) can be used by the customer towards other improvements or interventions that may be required, such as lifting the home. 
• The MAS Member has to fund the remedial work – we are only paying for damage that has occurred. 

• If councils recommend or require property level works, homeowners should contact their insurer to discuss any impacts on claims or policies. 
• If the customer completes the property level interventions so that the risk is reduced to an acceptable level, then the home will be insurable like any other home. For example, insurers will look at flood models, previous claims and what mitigations have been undertaken. 
• If the customer does not complete required interventions (or in the process of) then different policy options may be available such as excesses, premiums and/or exclusions. On a case-by-case basis this may include not continuing cover.  

2A (further assessment required) 

• No impact to claim, claim will continue to progress as normal. 
• Insurance pays for physical damage from the event up to the sum insured or any other policy limits and benefits that may apply. 
• Insurers would likely cash settle claim to provide flexibility to customer for options once council categorisation takes place. 
• If managed repair is already underway, continuation (or not) of the work in progress will be considered on a claim-by-claim basis until the property is categorised. 
• If the customer wishes to put a claim on hold, the insurer can complete assessments but hold the settlement until the customer is ready. 
• Insurers will honour temporary accommodation benefit up to the limit in your policy. 

• Insurance is available but insurers will look at individual property level information and apply normal underwriting (looking at models, previous claims, mitigations) and apply terms if needed. 

3 

• Claim impact determined on a claim-by-claim basis and could be cash settled. 
• Insurance pays for physical damage from the event up to the sum insured or any other policy limits and benefits that may apply. 
• There is no cover for undamaged property. 
• You can take this payment and rebuild or reinstate at another site. If the home is repairable the maximum payable is the repair cost (up to the sum insured or any other policy limits and benefits that may apply. You may wish to defer undertaking repair work on your property until you have decided whether to accept any Council offer and move to another location. 

• Insurers would be extremely unlikely to have risk appetite to continue cover where it has been deemed by council/government to be unsafe. 
• If residential occupation of property becomes an unacceptable land use, then it is unlikely MAS will be able to offer ongoing cover. MAS will, however, continue to assess these properties on a case-by-case basis.