MINOR QUAKE DAMAGE

Southland Times, Issue 24829, 22 August 1942, Page 4

MINOR QUAKE DAMAGE

Policy Of Insurance Companies

(P.A.) WELLINGTON, August 21. The executive council of the Underwriters’ Association, replying to the discussion in Parliament about earthquake insurance, points out that earthquake damage, whether by fire or shock, is normally excluded from fire insurance policies issued throughout the Empire. If the owners of properties, however, desire to include the risk of earthquake, that cover may be granted on the payment of an additional premium. Subject to certain conditions at varying rates, cover is granted to protect, a property owner against a major disaster or claim, but fit was never intended, nor could cover be granted, to protect those who do insure against earthquake for minor damage.

The conditions under which i nsu f" ance companies throughout the world grant earthquake cover provide that the insured must bear a certain amount of the damage. If this condition did not apply no insurance company would grant earthquake cover in New Zealand. Not more than one dwelling in 5000 was insured against earthquake, so only a very small percentage of householders has been affected by the conditions of earthquake cover. All policyholders are notified to read the conditions of their policies. The liability of insurance companies in the Wellington province alone is estimated at not less than £50,000,000. If the recent earthquake in Wellington had been of slightly greater severity, the claims on the companies would have been enormous, particularly had a conflagration such as in Napier resulted. A conservative estimate of the losses to be paid by the companies in the Wellington province as a result of the two recent earthquakes is £300,000. Earthquake insurance is granted by insurance companies only when cover is specially applied for. Insurance companies, realizing the huge liability involved, do not seek this class of insurance. It would be impossible at the rates charged, or even at greatly increased rates, to grant earthquake cover for minor damage. Insurance companies would welcome a discussion with the Government on the subject and would be pleased to place before the Government any further information it may desire.

Adverse comments on a clause in insurance policies imposing £5O franchise on earthquake risks were made by several members when a vote in the supplementary estimates of £206,500 for earthquake damage was under consideration in the House of Representatives on Thursday night. The Leader of the Opposition, Mr S. G. Holland, said he thought the time was ripe for the Government to state its policy in respect to earthquake repairs. Great hardship was being suffered by many people who had insufficient money to meet earthquake damage costs.