Mudpool swallows more ground around Rotorua home, but landlord likely covered by EQC

It's something (hopefully) not many people will have to think about, but what happens when a giant mudpool opens up in your backyard?

This week that very scenario happened in Rotorua, forcing the renters to relocate and the landlord "devastated".

Today, the steaming mudpool had grown in size again since it opened up early Tuesday morning. 

Rotorua Lakes Council told 1 NEWS there had been slightly more ground collapse on the property since yesterday, and council is working with the owner to further secure the property. 

They didn't know what would happen to the home, including whether it will need to be demolished or not, saying council’s role in the event is to ensure public safety and they couldn't comment on decisions relating to private property.

But, Insurance Council of New Zealand chief executive Tim Grafton told 1 NEWS geothermal activity is an event covered by EQC, so provided the property has fire insurance, EQC will deal with the damage caused to the land by the mudpool. 

On July 1, that cap is increasing to $150,000 + GST when the claimants insurance policy renews. If the damage exceeds the cap, the homeowner’s private insurance policy will pay the balance up to the sum insured.

"If a landlord has their house insured, then they will be covered the same as someone in an insured, owner-occupied property," Mr Grafton said, adding that the landlord would need to speak to their insurer or a broker to see if they're also covered by loss of rent in the case that their renters have to move out.

"The specific details of sublimits for certain types of damage may vary between different policies but by and large, people with house insurance will be covered for natural disaster damage to their house."

However, if they're not insured for events, like a fire, then they won't be covered by EQC, he said.