Bills skyrocket in quake's wake
Earthquake insurance is soaring at a shocking rate of up to five times more than the previous year.
Canterbury Employers' Chamber of Commerce chief executive Peter Townsend said insurance excess was commonly jumping from a dollar amount to about 5 per cent of total assets.
So a business with $4 million of assets was having now to shoulder an excess of $200,000 instead of paying a set dollar amount.
The rising costs of insurance and insurance issues were some of the most complex Recover Canterbury was dealing with, he said.
Recover Canterbury is an advisory service for earthquake-hit businesses and is a joint venture between the chamber and the Canterbury Development Corporation.
Rangiora cafe owner Fiona Bersani and her husband have been walloped with a 422 per cent increase in their insurance bill along with a handful of other tenants in a building in High St, Rangiora.
The Good Street Deli cafe now faces an extra $6000 in insurance costs over the previous year.
She said though the business had been enjoying consistently 25 per cent more trade in its Rangiora location since the February quake due to the influx of Christchurch residents, the 422 per cent hike was still staggering.
The accountant acting for the building owner should have put a warning on the envelope, she said.
"I could not believe it. I kept thinking it surely can't be 422 per cent. It just seemed like a big fat typo."
Insurance broker Roger Hanson of IC Frith said any older building still standing and pre-1935 was finding the earthquake insurance component of its premium was up to five times greater than the previous year depending on the age of the building and its construction.
That could push the whole premium up by up to 80 per cent, he said.
"Some people are up 20 per cent, some 30 per cent and some are up 80 per cent. It depends on the mix, it depends on the construction, it depends on the location and other particulars and it depends on the age," he said.
Generally earthquake insurance was now 5 per cent of site value, so a $30m building in the central business district could face a new excess of $1.5m.
Before the quakes it would have in general been 2.5 per cent of the claim, though policies would have individual variations, he said.
Business owners were shocked by the new insurance costs.
"The colour goes out of their faces as you can imagine.
"They have no choice. It is not a pleasant thing," Hanson said.
The broker could not take a client to another insurer because insurers were not taking on new business, he said.
Rangiora was being "tarred with the Canterbury earthquake brush".
Insurers were not taking on additional insurance risks business but were rolling over existing policies at the higher premiums and higher excesses for existing customers, Hanson said.