What is New Building Standard (NBS) and How Can it Affect a Building’s Insurance?

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NBS is simply the assessment of the earthquake rating a property is expected to have when built to the current building code.  NBS therefore changes to reflect code changes.  NBS is calculated as part of a seismic assessment of how the building has been constructed.

 

The percentage of NBS rating is not a measure of the building’s ability to handle an earthquake without damage for insurance purposes but is about “life-protection”.  As such NBS is unlikely to alter the insurance premium unless the NBS is substantially below the current threshold.  Any increase in the NBS percentage may however improve the building’s expected performance in protecting life.

 

When a seismic assessment is performed by a structural engineer, this will result in an NBS rating being given to an existing building.  The assessment calculates the percentage NBS achieved.

 

Significantly NBS is measured at the lowest defective point in a building, so if there is a particular weakness which is rated 30%, the whole building will be rated 30% until the defect is addressed.

 

A building with a rating of less than 67% NBS is deemed to be an “earthquake risk”.  A rating less than 34% NBS means the building is “earthquake prone”.

 

If a building, or part of a building, is earthquake prone it is believed it will ultimately have its capacity exceeded in a moderate earthquake and if it were to collapse, would do so in a way likely to cause injury or death to persons in or near the building, or injury/death or damage to adjacent property.

 

If a building is found to be earthquake prone this doesn’t necessarily mean it shouldn’t be occupied.  The Building Act provides a period of years for strengthening or demolition work to be undertaken.

 

New Zealand is categorised into three risk levels

Source: How the system for managing earthquake-prone buildings works

The link below identifies what regions of NZ are in which risk category:

Seismic Risk Areas Map

 

For further information please contact Body Corporate Manager Alex McAllister: alex@bbcl.co.nz

EQC Charges on the Rise

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Residential owners should be aware the residential building cap covered by EQC has been increased from 1 July 2019 to $150,000 (plus GST).  This is up from the previous base of $100,000.  The increase will be helpful in natural disasters where comparatively minor damage occurs.  In circumstances where a total loss arises then the EQC cap will invariably need to be topped up by natural disaster cover under the Body Corporate’s material damage policy.  The top-up for natural disaster is already included in all Boutique policies.

As with any change in cover, the premium increases and EQC’s take will go up from $200 plus GST per unit to $300 plus GST.  This will be reflected in insurance renewals from 1 July 2019.  In theory the insurer’s premium should reduce to reflect the increase in EQC cap  – time will tell.