Uninsured risk total loss as floods strike

By RICHARD BRADDELL

Too many people in small towns have no house insurance and risk losing everything during floods, the Insurance Council warns.

This week's North Island flooding may already have resulted in claims worth $5 million. Claims have come particularly from Northland, the Coromandel and North Shore City.

Insurance Council chief executive Chris Ryan said small rural centres were most at risk of being wiped out entirely by flooding because of the relatively high proportion of households with no or inadequate insurance.

"Floods at Ohura devastated the town because 45 per cent of homes were completely uninsured." And without insurance, householders could not even fall back on the Earthquake Commission, he said.

The Insurance Council believes about 15 per cent of homeowners have neither house nor contents insurance.

While urban centres tend to be relatively well insured, to meet banks' requirements for mortgages, many people in provincial centres had inherited their houses, were on low incomes or were older and no longer saw the need for insurance.

But rural centres were most likely to be damaged by floods, because of nearby rivers, lakes or natural runoffs.

That could be devastating to those communities because many of their people might not be able to afford rebuilding.

In December, insurers paid out $50 million to cover floods in Queenstown. Floods in Tauranga, South Canterbury, Whangarei, Rotorua, Dargaville, Northland and Pukekohe have cost many millions more in the past 18 months.