A Wellington property owner suffered considerable damage after heavy rain caused a landslip on their property. Their house was red-stickered, and the repair costs for the house and land were significant.

We provide below a summary of when a neighbouring owner may be liable for slips or flooding, and what cover may be available through house insurance or the Natural Hazards Commission.

Liability for landslips

A landowner is entitled to the natural support of their land from adjoining land. If an adjoining owner excavates their land and that excavation causes the neighbouring land to slip, the excavating owner may be liable for the damage caused to the neighbouring property.

However, liability for excavation damage generally does not pass to a later purchaser if the excavation was carried out by a previous owner.

The position is different where the slip is caused by an artificial accumulation of soil on the land, for example where a sloping area has been built up to create a level lawn. If that fill slips onto a neighbouring property, the owner of the slipping land may be liable for the resulting damage. This liability can pass to later purchasers of the slipping land.

It is important to note that a landowner is generally not legally liable for damage caused by a naturally occurring landslip.

Liability for flooding

A landowner on higher ground will generally not be liable merely because naturally occurring surface water flows downhill onto neighbouring lower land.

However, the owner of higher land may be liable if damage to lower land is caused by a structure on the higher land, or by an alteration to the natural flow of water. Examples may include a pond that overflows or bursts, drainage works, culverts, redirected stormwater, or changes that redirect a natural watercourse.

Insurance for house and land damage

Damage to a house will generally be dealt with under the homeowner’s house insurance policy, subject to the terms of that policy.

Damage to residential land is different. Most homeowners will be surprised to learn that residential land is generally not comprehensively insured, although limited cover may be available through natural hazards insurance.

Natural Hazards Commission

Residential property owners who have a home insurance policy that includes fire insurance generally pay a Natural Hazards Insurance levy. That levy provides access to limited cover for certain natural hazard damage to the home, and to some areas of residential land.

For covered natural hazard damage to a home, the Natural Hazards Commission provides the first layer of cover, currently up to $300,000 plus GST for the building cover cap. The balance is generally dealt with by the homeowner’s private insurer, subject to the policy terms and sum insured.

Limited cover is also available for certain residential land, subject to a land cover cap. The amount is based on the value of the damaged land and will often be less than the actual cost of repairing or stabilising it.

There is also limited cover for some land structures, calculated on an indemnity basis (which is the depreciated value at the time of loss) and subject to caps. This may include retaining walls, bridges, and culverts.

It is important to make a claim with the Natural Hazards Commission as soon as possible after a landslip occurs. Timeframes can affect whether a claim is accepted, so homeowners should check the current NHC requirements and notify their insurer promptly after the damage occurs.

Further detailed information concerning insurance coverage can be obtained from the Natural Hazards Commission’s website at https://www.naturalhazards.govt.nz/

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Rachel Collins and Emily Hannon