A Court of Appeal ruling, reported on September 6, 2026, has confirmed a 34-day trial beginning April 12, 2027, for a class action in which 228 Canterbury homeowners are pursuing combined claims of approximately $80 million against the Natural Hazards Commission (NHC). For insurance brokers, the judgment is less significant as a legal update than as a reminder of a structural gap in New Zealand’s natural hazards coverage framework – one that is not confined to Canterbury.
Carol Mathias, 70, purchased a Christchurch unit in 2015 that had been repaired by the Earthquake Commission (EQC) following the 2010 and 2011 Canterbury earthquake sequence. After taking ownership, she found the repairs did not meet the standard required under the Earthquake Commission Act. The cost to bring the property up to that standard exceeded the EQC statutory cap, and she was paid out her statutory entitlement in 2021. She was left carrying the remainder herself.
Private insurance provided no remedy. The damage predated her policy. “I had to get a mortgage to buy this place; two lots of rates and two lots of insurance, which has forced me to keep working,” she told NZME. More than a decade on, she remains without resolution: “I don't feel like I understand any more than I did on day one; I would like to see it settled sooner rather than later.”
Under the Natural Hazards Insurance Act 2023 (NHI Act), which replaced the Earthquake Commission Act 1993 in July 2024, the NHC’s residential building cover cap is generally $300,000 plus GST per dwelling, subject to the Act’s calculation rules. When a previous EQC repair is later found to have been inadequate and the cost of remediation exceeds the applicable natural hazard cover cap, the resulting over-cap amount may not be recoverable under the current owner’s private insurance policy, particularly where the damage predates that policy. The issue has been a particular problem for Canterbury homeowners who purchased properties after the earthquakes and subsequently discovered missed or sub-standard repairs.
Mathias is the representative plaintiff in a class action backed by Canterbury Litigation Funding (CLF), a New Zealand-based litigation funder focused on EQC and insurance-related proceedings. The proceeding alleges that EQC owed claimants a duty of reasonable skill and care. Associate Justice Owen Paulsen described the case as a representative proceeding asserting a “multi-part and novel duty of care” in a distinctive statutory context spanning about 10 years. He allocated 34 days for the trial, rejecting the five-day estimate put forward by Mathias’s lawyer, Grant Shand.
Court of Appeal Justices Sarah Katz and Neil Campbell upheld both the 34-day trial allocation and a $628,000 security-for-costs order, finding no arguable error in either decision. CLF confirmed the $628,000 must be paid before the case can proceed. “Unfortunately, there is no further appeal rights available, even though we don’t believe this decision is correct,” it said in a statement. The NHC declined to comment on the judgment, according to NZ Herald.
The government’s On-sold Support Package, administered by the NHC, was established to assist eligible Canterbury homeowners who had bought properties affected by the Canterbury earthquakes and later discovered missed earthquake damage or failed repairs. The scheme provides ex gratia payments covering the over-cap portion of eligible repair costs, including for both missed damage and failed repairs, with applications closing on October 14, 2020, according to the NHC. More than 800 homeowners had completed repairs and returned to their properties through the programme, NHC chief executive Tina Mitchell said in 2024. The Mathias proceeding highlights a separate set of claims involving homeowners seeking compensation for alleged shortcomings in the assessment and repair of earthquake damage.
According to the NHC, buyers of Canterbury homes should check any previous insurance claims, potentially obtain structural or geotechnical engineering reports, and seek advice on electrical, drainage, and plumbing elements before purchasing. The NHC also operates the Natural Hazards Portal, through which settled EQCover or NHCover claims on a property can be searched. For brokers, those steps underpin the coverage conversation. Where a prior EQC or NHC claim exists, the key questions are: Was the repair settled under the statutory cap? Has the work been independently assessed since? Does any residual gap remain unaddressed? The current framework has no automatic mechanism to bridge that gap through private insurance.
The risk is not confined to Canterbury. The Reserve Bank of New Zealand (RBNZ) has identified that risk-based pricing for seismic exposure has been felt particularly strongly in Wellington, where average annual expenditure on building insurance for main dwellings grew from $1,539 to $2,452 in inflation-adjusted terms between 2017 and 2023, compared with a national average increase from $1,397 to $1,867, according to the RBNZ’s May 2024 Financial Stability Report. The RBNZ’s May 2026 Financial Stability Report further identified insurance affordability, underinsurance, and insurance retreat from areas exposed to elevated flooding risk as emerging pressures that could increase financial stability risks. According to GNS Science, the Wellington-Wairarapa region contains several major active faults, including the Wellington, Ohariu, and Wairarapa faults, and is also exposed to the Hikurangi subduction zone. A significant seismic event could therefore test the interaction between NHC cover and private insurance in ways that raise some of the same coverage and liability questions highlighted by the Mathias proceeding.
The NHC scheme underpinning every residential property placement is itself under structural pressure. A January 2026 Cabinet paper confirmed the current levy of 16 cents per $100 of building cover sits below the technical rate of 24 cents needed for scheme self-sufficiency, with just a 38% probability the fund covers its costs over five years without Crown support, according to the Treasury. The 2022 update to the National Seismic Hazard Model, which produced an average 50% increase in estimated earthquake shaking hazards nationally, is cited by Treasury as a key driver of that underfunding.
