Eventually everyone in Aotearoa who needs insurance for their homes, businesses and cars will pay more for their policies. That’s because insurers are nervous about the earthquake risk for all of Aotearoa, not just Canterbury.

The Canterbury earthquakes highlighted the fact that the seismic risk in many areas may be higher than previously realised, and insurers are paying more attention now. Auckland, for example, is no further from the main fault line that runs through Wellington than Christchurch is. That means it has a similar risk of experiencing a devastating earthquake.

Much of the decision-making over Aotearoa’s insurance future is happening overseas. Our insurers such as AMI and Tower  need to pay for insurance with international reinsurers such as Swiss Re, in case they get hit with numerous or very expensive claims.

The reinsurers are currently reassessing their “loss models” for New Zealand. Suzanne Totaro, vice president of communications at the world’s second largest reinsurer Swiss Re, says this may result in changes in terms and conditions, and in premium increases.

Another reason premiums will rise is that the earthquakes caused a sudden end to the price war between local insurers that was driving premiums down to unsustainable levels. EQC levies will also go up.

The rising cost isn’t the only insurance issue for Ngāi Tahu whānau. Phil Snookes of the Insurance Brokers Association of New Zealand (IBANZ) says insurers may decide not to cover earthquakes at all, as is the case in California.

Already some insurers have limited the amount they pay out if a house is destroyed. Vero, for example, has altered the terms and conditions of its home insurance policies for people living in its “Christchurch Exclusion Zone”. The exclusion zone is the area north of the Rakaia River and south of the Waipara River, extending west to the foothills of the Puketeraki range.

Instead of being offered open-ended replacement of a house following an earthquake, tsunami or flood, cover will be limited to a $2000 per square metre rebuild cost. Until now there was no such limit for most home owners with replacement cover. Vero has, at the same time, added a $10,000 excess for flood claims.

Other insurance companies will almost certainly follow suit and tighten terms and conditions. One expected change is for insurance companies to remove the clause that reinstates the sum insured following an event such as an earthquake or tsunami. So after such an event, an insurer may adjust what your property is worth.

Diana Clement  is a freelance journalist who writes in the personal finance and property investing. She has worked in the UK and New Zealand, writing for the top personal finance publications for over 20 years. In 2007 and 2006 she was the overall winner of the New Zealand Property Media Awards.

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