Homeowners to be paid to leave earthquake-hit zones in New Zealand

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New Zealand Earthquake Insurance NewsThe federal government of New Zealand will be offering to give money to homeowners in the areas of the country that were most heavily hit by earthquakes, if those residents will agree to leave those regions.

The second-largest city in New Zealand is Christchurch. This city was the hardest hit in two recent major earthquakes, including one in September 2010 with a 7.1 magnitude, as well as one in February 2011 with a 7.1 magnitude Much of the city was left in ruins, and 181 people died as a result of the quakes.

Therefore, the New Zealand government announced that it will be offering to pay about 5,000 homeowners in Christchurch to agree to leave the area and have their homes leveled, designating certain areas as unsuitable for rebuilding. After that first group, an additional 10,000 homes are also being assessed to determine if they should also be destroyed and their areas declared too unstable for rebuilding.

Estimates by the government have shown that the first payoff could cost up to $500 million, even after insurance coverage is factored into the total.

The country’s Prime Minister, John Key, has explained that the cost of the recent quakes has already reached $15 billion, which is the equivalent of 8 percent of the yearly economy for the nation. To illustrate the significance of the damage, he compared the Christchurch circumstance to that of New Orleans after Hurricane Katrina. That said, in comparison, Katrina’s disaster matched only 1 percent of the annual economy of the United States.

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