What is the Fire Emergency Levy?
Policyholders who insure property in New Zealand against the risk of fire are liable to pay a levy to FENZ, with the amount of levy payable calculated based on the amount insured, as defined in legislation. What does this mean for property owners?
May 19, 2020
The Fire Emergency Levy provides around 95% of the funding for the operations of Fire and Emergency New Zealand (FENZ). All policyholders who insure property in New Zealand against the risk of fire are liable to pay a levy to FENZ, with the amount of levy payable calculated based on the amount insured, as defined in legislation.
How is the levy calculated?
The Fire and Emergency Act 2017 outlines that the levy is calculated based on the amount insured, however, this definition has been problematic, leading to FENZ remaining in a ‘transitional period’ whereby the levy is calculated under the Fire Services Act 1975, based on the indemnity value of the property. The levies are calculated as follows:
- Residential buildings and personal property: 10.6 cents per $100 insured, with a cap on the levy of $106
- Other property (i.e. commercial property): 10.6 cents per $100 insured, but with no cap on the levy
The indemnity value is that stated by either:
- A signed declaration by the owner; or
- A valuation certificate
Note that under the Act, FENZ retains the right to carry out their own determination if they consider the declared indemnity value is not ‘fair and reasonable’.
Some items of property are exempt from the levy, an area that is commonly misunderstood. Pertinent exemptions, from a commercial property perspective, are as follows:
- Road, street or path
- Retaining wall, fence or wall
- Drain or channel
- Electric supply, telegraph or telephone pole, line or cable
- Reservoir, swimming bath, water tank, water tower, or septic tank
- Water reticulation pipe
Correct assessment of indemnity value is important to comply with the legislation. Knowledge of how the levies are calculated, and the exemptions, can result in significant levy savings.
How we can help
Our team completes over 3,000 insurance valuations every year across a broad range of assets – from dwellings to apartment complexes, motels to hotels, retail assets to hospitality and bars, industrial buildings to office towers. We also have experts in the valuation of specialised assets such as storage units, service stations, hospitals and government assets.
We continually research and analyse costs and review relevant legislation to ensure our clients are provided with the best advice.
This article was originally published by TelferYoung