Details of museum's insurance cover revealed

Rotorua Lakes Council chief financial officer Thomas Colle, pictured at a meeting earlier this year.

The financial impact of the closure of the Rotorua Museum is yet to be calculated, but comprehensive insurance cover should cover those costs, says the Rotorua Lakes Council's chief financial officer.

Councillor Merepeka Raukawa-Tait raised the question of insurance cover for the iconic building at a meeting of the council's Operations and Monitoring Committee today.

She was told that as long as the damage repair bill, combined with loss of earnings, exceeded an excess of $5 million, the museum would be fully covered.

At the start of this month, Rotorua Museum director Stewart Brown said the museum would be closed indefinitely with the loss of about 20 jobs.

He said the results of a detailed seismic assessment should be known in April but he had no idea what the report would uncover or if extensive repair work and earthquake strengthening would be needed, which may mean the museum would have to stay closed for much longer.

The original part of the museum, built in 1908, suffered further damage after the Kaikoura earthquake and was closed as a precautionary measure.

"I know it's hard to predict what it's going to cost us at this stage ... but how well are we actually insured at the museum?" Mrs Raukawa-Tait asked.

"Is it going to be helpful in the long term, getting hopefully a good payout?"

The council's chief financial officer Thomas Colle said no-one knew what the full extent of the damage was, or how much revenue would be lost during the closure, but they would know more over the Christmas period and a report would be prepared for councillors early next year.

"We have met our insurers, we're trying to get a handle on what, if anything, we anticipate from that insurance," Mr Colle said.

"We are still undertaking work to understand what it's going to take to repair.

"The engineers are there and they are trawling through every nook and cranny to understand the extent of the damage.

"Once that's understood then they'll prepare a plan of how to fix it.

"Once they have prepared that plan then we will understand what the cost of it will be and whether that cost will exceed the insurance deductible and therefore when the insurance will kick in."

He said the building was fully insured for about $50 million, but had a $5 million excess.

"So the damage has to exceed $5 million before the insurance cover kicks in.

"On top of that we also have business interruption [cover] which provides for loss of income ... and that's also on the same deductible so it's a combined deductible.

"When the combined repair costs and loss of income exceeds the deductible, that's when the insurance will kick in."

Mr Colle said the excess was so high because of the age of the building and insurance was primarily in place to cover catastrophic events.

However, Mr Colle said the council had already budgeted $20 million in its long-term plan for earthquake strengthening work specifically for the museum, Sir Howard Morrison Performing Arts Centre and i-Site buildings.

He said $2.2 million would be spent on the i-Site, leaving the rest available for the other two buildings.

"But I'm not going to speculate at the moment as to how much change we may get out of $20 million for the museum because, as you know, it will be significant expenditure."

Rotorua Museum; figures to the end of October
- Total revenue for October: $195,227
- That's 24.2 per cent higher than budget
- Total revenue for the financial year to date: $564,320
- That's 15.3 per cent higher than budget
- Total visitors for October: 9863
- Total visitors for the financial year to date: 37,169
- That's up 16 per cent on last year