Insurance risk for buildings subject to natural hazards

The popularity of coastal property in recent years has seen many high-value residential buildings granted building consent but subject to notice under section 72 Building Act 2004 (or its predecessor, section 36 Building Act 1991). This notice applies where land is subject natural hazard, but the building work itself is unlikely to worsen or accelerate the hazard. Provided the territorial authority gives notice to the Registrar-General of Lands, the territorial authority is then exempted from liability for damage arising from the natural hazard. While the exemption from liability for territorial authorities is relatively well known (registration of the notice should be apparent from a title search), less well known is the discretion held by Earthquake Commission to decline (or meet only part of) a claim where a certificate of title contains an entry identifying the natural hazard concerned. With predictions of sea level rise and increased storminess due to global warming, the insurance implications from the issue of building consent subject to a natural hazard notice has the potential to catch out uninformed purchasers whose properties suffer damage from a storm or other natural hazard event.