Uninsurable and unsellable: The impossible situation facing more and more homeowners

Thursday, 5 February 2026

Kiwis come to Stuff to see what’s happening in their world. We’re committed to telling you quickly and accurately. But we’re also committed to providing nuance and context, to explain how and why things happen. Our explainer articles are all about getting to the heart of complex events and giving you reliable information. If you’ve a subject you want us to explain or fact-check, fill in the form at the bottom of this story.

Born and bred West Coaster David Hughes says Westport has a great community, and has been a “fantastic” place to raise his 12-year-old son.

A fishing and naval career took Hughes around the country, but the pull of home was strong, and he bought his current property about five years ago.

But now, Hughes isn’t so sure about Westport’s future.

“Uncle Jones [Resources Minister, Shane] is trying to attract people to the coast for all these amazing mining jobs and opportunities… But why would you come here for a well-paying job, trying to build a future for your family in a town that's not being covered by one of the basic necessities? That's insurance.”

Last week, RNZ reported that AA Insurance had temporarily stopped offering new insurance policies in the town because of flood risk. The company wrote to Buller District Mayor Chris Russell at the end of 2025 to tell him they were hitting pause on new business, home and landlord policies.

That may not have been a surprise - nature has hammered Westport over the past decade.

In 2015, the Buller Gorge was blocked by slips and streets flooded with sewage. Three years later, the town was hit twice in a month, first by ex-cyclone Fehi, then Cyclone Gita created further chaos.

In 2021, 463 homes were red- or yellow-stickered after flooding. Residents were evacuated after flooding in early 2022, and there was localised flooding in 2023.

“If you had half a brain, why would you move here and buy a depreciating asset? It’s lose-lose,” Hughes told Stuff.

So, while AA Insurance is the first to announce a blanket pause, climate risk expert Dr Belinda Storey wonders if other insurers are making similar assessments.

“Going forward, I think there will be more and more locations, either at the lowest elevation in coastal inundation zones, or at the bottom of the bowl of floodplains, where insurers will be increasingly reluctant to continue to provide cover.”

Stuff asked other insurers whether they had any blanket restrictions in place. AMI, State, NZI and Tower all said no - they decide policies on a case-by-case basis.

Hughes has put more thought into his insurance coverage than most.

“A lot of people roll over and moan about the increases… [but] you should review all of your policies and all of your contracts annually.”

When Hughes did this last year, he found his annual premium had increased by a third. So he jumped ship to an AMP policy with a high excess, but less than half the premiums.

Living on slightly elevated land, Hughes was lucky to have the option. Already, there are New Zealanders stuck in houses that are uninsurable and unsellable.

It’s a phenomenon called insurance retreat. Let’s unpack it.

Your rights, their obligations

Insurers are under no obligation to insure your house.

Tim Gunn, a lawyer based in Matakana, north of Auckland who specialises in insurance, described it as a “risk-based product”. If an insurer deems something too risky, they can exclude it from your policy - or deny coverage altogether.

And they’re not obliged to continue your cover. At the end of the coverage period, neither you nor your insurer are bound to renew.

Risks come in all shapes and sizes

AA Insurance hit pause on new policies in Westport due to flood risk. That’s a risk being driven by climate change - more on that below.

But on Tuesday, it was reported that the company had also stopped issuing new policies in the Canterbury communities of Woodend, Lincoln and Rolleston because they had reached their “maximum exposure to seismic risk”.

“Our exposure level naturally shifts over time with customer movement. So there will be periods where we are able to accept new policies, provided we remain within our exposure limit,” AA’s head of underwriting, Dee Naidu, said.

Seismic risk, unlike climate-driven risks, doesn’t increase over time. We may learn more about it, but the risk remains stable. So for a company to hit its maximum exposure, it is more likely to do with the number of properties insured in an area than any change in the risk.

But for floods, that risk is increasing. Climate change does not cause storms, but it makes them more likely to happen and more severe when they do.

So, as we careen towards 2 degrees of warming, insurers are constantly assessing and reassessing the risks of floods, coastal inundation and landslides.

Uninsurable = unsellable

Zooming out from the problems in Westport and Canterbury, the bigger, national issue is insurance retreat.

In short, unaddressed risks driven by climate change will lead to increased costs for insurers. This risks insurance premiums becoming unaffordable or, in some areas, insurance companies declining to provide coverage at all.

Lawyer Tim Gunn said he is increasingly seeing this with his clients.

“It's a scary new thing for lots of people. You have beachfront properties that are worth millions, but insurers now say, ‘No, I'm not really interested in providing you renewal.’”

This leaves homeowners in an impossible situation. Not only is their property uninsured, but also near-impossible to sell. Banks will not lend to a buyer that hasn’t insured the property their mortgage is against.

So if your home is uninsurable, it’s unsellable. Leaving Kiwis stuck.

Are you in this situation, or do you know anybody in this situation? Email emma.ricketts@stuffdigital.co.nz

To put it bluntly, it’s a terrible situation. And the key to avoiding it is faster action on adaptation, Storey said.

The options

So let’s assess the options. What can we - or more accurately, the government of the day - do to avoid disaster?

Option 1 is to do nothing and let the market run its course. As climate change worsens, more properties will suffer damage, insurance premiums will rise and insurance could become unobtainable. Kiwis risk being left with uninsurable, unsellable homes.

Option 2 is a reinsurance scheme. The government could back insurance companies financially, to save homeowners from this situation.

You may be thinking - don’t we already have a Natural Hazards Commission?

We do, but it is limited. It does not cover damage to residential buildings by floods or storms. And for hazards it does cover - like earthquake damage - payouts are capped at $300,000. The rest is up to your private insurer.

The UK Government has created a flood-specific reinsurance scheme. Basically, insurers pay levies, which acts as a backstop when flood damage happens.

In theory, it will only run until 2039. After that, flood defences are meant to be so good that private insurers will be able to handle it themselves.

But Storey isn’t buying it. “Once a government provides public insurance, it's next to impossible to take away. Nothing is going to be fixed [by 2039]… it’s just a ticking timebomb.”

This sort of scheme ultimately leads to taxpayers paying for people to stay in homes in hazardous locations, she said.

Option 3 is to build defences. Whatever the risk - flooding, coastal erosion, landslides - build something to hold it back.

This is the current Government’s preferred option. When asked about the developments in Westport, Climate Change Minister Simon Watts emphasised the importance of adaptation.

“The Government has already committed $22.9m to the Resilient Westport programme which includes a comprehensive flood protection scheme for the town,” he said in a statement. “The Government expects the construction of stopbanks to proceed as quickly as practicable.”

However, according to Storey, this just encourages development in hazardous locations.

“It is very politically attractive to offer to build flood defences, and there has been a significant amount of money promised to Westport to be able to do that. But it doesn’t actually reduce the number of houses that are in the flood zone,” she said.

When you build a defence, you're more likely to build more houses behind it. So if it fails - and ever-increasing weather events mean it may - the cost to society is even bigger. Potentially in life, as well as property damage.

“What we should be doing instead is thinking about these locations, and accepting the fact that there is a time limit on them,” Storey said.

That brings us to the final option. Option 4 is not popular politically, or among homeowners. But according to Storey, it’s the best long-term solution.

It’s managed retreat.

“One of the presumptions people have is that when a major event occurs, we need to rebuild as long as we can preserve people’s safety. But in some cases, we should think twice,” she said.

“Should we rebuild in these hazardous locations, or should we accept that there is a time limit? I mean… insurers may not wait for a big event. They might see a big storm in Australia, and that could reset their risk appetite.”

The key message from Storey is a need for speed. Successive governments have pointed to elections and promised movement in the next term, she said.

That’s something the representative body for insurance companies - the Insurance Council - echoed.

“Insurers have consistently supported a proactive, government-led approach to adaptation, working alongside councils, iwi, the private sector and other partners,” a spokesperson said. “The [Government’s] National Adaptation Framework is an important first step, but there is urgency in turning intent into action.”