Treading Water: Can’t sell, can’t insure, can’t leave - that’s property purgatory
Sunday, 17 May 2026
With New Zealand experiencing a storm on average every eight days, thousands of properties in coastal inundation and flood zones could become uninsurable. Our new series explores the impacts of relentless weather events on families and communities, asks for how much longer insurance will be available, and how the Government is planning to respond.
Kiwi property owners are being caught in “property purgatory” - owning an asset they cannot sell, refinance or insure because it sits in a climate high-risk zone.
Effectively, they are marooned on land that a policy-restructuring insurance market has begun to abandon, but poor data means the scale of the problem remains in the shadows.
We know purgatory exists, but data shortcomings mean we don’t know its true extent, Victoria University of Wellington public policy expert Jonathan Boston says.
New Zealand lacks a centralised national database to track which specific properties are losing coverage or what they are currently insured for.
Read more:
We don’t know exactly how many people are being declined insurance.
We can't track under-insurance (people lowering their sum-insured to save money) or non-insurance (people walking away from coverage entirely).
As such, policy-making is reactive rather than proactive because the scale of the 'purgatory' remains unquantified.
Westport homeowner David Hughes highlights a frustrating irony: even if your house has never flooded or sits on high ground, you can be penalised by the geographic 'blanket' of risk modelling.
He was shocked by his huge premium increase last year from ASB.
'It had surged up by 35% with no justification that put us up to nearly $4000 per annum for just the house, no contents or vehicles,' he said.
'With a doubling of rates it was just unsustainable. It would cost over $10,000 a year for rates and insurance,” he says.
“You need to be clearing $260 a week gross just to pay for rates and insurance and then there's power and food. The cost of living is just crushing people.
'Our house has never flooded. We are on some of the highest ground in town. There was no flooding even in our gutters, but several blocks around us did.”
In 'frustration and disgust' he began shopping around, leaving him uninsured for nine months.
'I looked at all the insurance providers for the best savings,' he said.
He completed online quotes with several companies, finding an up to 100% difference between providers.
In Wairoa, mayor Craig Little said many families suffered from damaged homes, unaffordable insurance and uncertain futures after Cyclone Gabrielle.
While stopbanks and flood protection works were expected to eventually restore confidence, he said some properties were effectively stuck in limbo for now.
“As soon as the first digger hits the ground, those homes’ values will go straight up,” he said. “But at the moment a lot of those homes can’t be insured.”
Hardship extended well beyond the immediate flood damage, he said.
Some residents had simply been too poor to maintain insurance cover before the cyclone struck.
“These people were struggling hard to get food on the table, so they had to let something go, and they let the insurance go,” he said.
In some cases, banks exercised their right over the insurance money to reduce outstanding loans, leaving owners unable to rebuild without taking on new debt.
An elected member of one of the three Far North Community Boards said insurance was one of several weather-related stresses for residents.
It hurt small settlements, farmers and marae, said the official, who did not want to be named due to local sensitivities.
'There's a lot of trauma out there, we all know people who are affected by this,' they said about the insurance issue. The Far North was so poor that in some areas people lived in unconsented dwellings.
And the hard impact of Covid - when the Far North was cut off and backpackers and tourists dried up, crippling the economy - had yet to bounce back.
Weather-related storms kept landing blows, main roads closed due to slips, and sea storms damaged and exposed water infrastructure.
'What hangs over me is there's so much trauma from interrelated events. Insurance problems have just compounded the hardship,' the elected member said.
Boston sees the Government flying blind into the complex and crucially important societal issue of housing and shelter insurance.
Insurers use elevation maps, flood recurrence modelling, coastal inundation forecasts, landslip modelling, and claims history to decide where they offer protection, and at what cost.
AA Insurance recently announced a temporary halt on all new home, business, and landlord insurance policies for the Westport area. It will renew existing policies.
Internal data showed AA had reached its 'maximum level of exposure' for flood risk in that area. Westport can be hit by both river flooding and rising sea levels.
A Helen Clark Foundation report and consultancy firm WSP warned last year that up to 10,000 properties in Auckland, Wellington, Christchurch, and Dunedin are at high risk of becoming uninsurable within the next 25 years due to rising sea-level, with high tides, storm surges and waves swamping land.
New Zealand is said to now experience a damaging storm on average every eight days, a frequency that has more than doubled in the last decade.
Insurers are starting to charge higher premiums for houses on floodplains or cliff-tops. So a house may still be 'insurable', but the premium makes it effectively unsaleable.
'You own a house, but you can't do anything with it,” says Boston. “You can't move because you haven't got any assets to move to.
“You've acquired a risk that you knew nothing about… and if your work is vulnerable as well, you're potentially going to be bankrupt.”
Many of those trapped, bought homes on the understanding of having clean Land Information Memorandums (LIMs) - only to then have updated climate modelling render their homes vulnerable.
“Someone may have bought it 30 years ago in good faith, with no indication of river flooding or sea level rise,” Boston says.
“Then the climate system changed. We are faced with risks of a magnitude humanity has not had to cope with since the end of the Ice Age.'
The Insurance Council said reducing risk through smarter planning, resilient infrastructure, and better information was essential to ensure insurance remained accessible and available.
New Zealand has a balanced approach through a mix of private and public insurance via the Natural Hazards Commission.
Maintaining clear risk signals was important as it helped ensure development decisions reflected underlying risk, which would support more resilient communities.
In his upcoming book on insurance and climate change - titled Insuring the Future: Reimagining Home Insurance in Aotearoa - Boston argues that because New Zealand has a disproportionate amount of capital tied up in housing, 'shelter' must be treated as a basic human need rather than just a market asset.
He tells the Sunday Star-Times that New Zealand faces a stark political choice between two paths:
The Market Route: Risk-based pricing where individuals are responsible for their own assets. If you become uninsurable, that is 'bad luck'.
The Solidaristic Route: A collective risk-pooling approach where the state and society share the burden to maintain social cohesion.
“We need to decide whether we're going to link the price of insurance to the risk… or address those risks collectively in a systematic and equitable way,” Boston says.
“The politics are diabolical. Some people are just wilfully blind, including some of our political leaders, to the magnitude of the risks we face.'
While physical adaptations like raising houses on stilts exist, Boston notes they are rarely cost-effective against accelerating sea levels.
He advocates for a 'paradigm shift' involving the Natural Hazards Commission to facilitate planned relocation where protection isn't feasible.
“We have the capacity to make ethical, rational decisions,” he says. “Whether we demonstrate that capacity is another matter. Plainly, we're not doing very well at the moment.”
He says his book aims to re-fashion policy frameworks, to take into account we're entering a new age, and can't just rely on previous policy arrangements we've had.
“You've got ideological or philosophical differences over how you might respond, even if you accept that we've got unprecedented risk,” he says.
“All those things make it difficult to get a durable multi party agreement. We do have the capacity as a human species, to take risks seriously, to exercise foresight, to do really good policy analysis and to make ethical, cost effective, rational decisions.
“We have that capacity, whether we demonstrate that capacity is another matter. And plainly, we're not doing very well at the moment. We do not have in place the kind of policy framework we need.”