The Waitaki and Clutha District Councils will get insurance cover on their underground assets restored on Friday, but both are expecting to have to pay the insurer at least 300% more in premiums.
Both councils are in the Local Authority Protection Programme (Lapp), along with about 60 other local authorities in New Zealand, but had cover suspended because of the impact of the Christchurch earthquakes.
The $40 million fund built up by Lapp since 1993 to cover the local authorities' 40% share of any disaster damage - the Government pays 60% - was exhausted by the Christchurch earthquakes.
Lapp suspended cover until June 30, but it will resume on July 1.
The Waitaki District Council has decided to remain with the fund, and has already budgeted in its 2011-12 annual plan to increase the premium from $25,000 to $100,000.
Lapp covers underground assets such as sewerage and stormwater, but an allowance has also been made for other insurance premiums to rise, the council's strategy group manager, Richard Mabon, said yesterday.
The council also has its own $3.8 million disaster fund, which provides quick access to capital to immediately start any repairs.
While Waitaki is remaining with Lapp, the Clutha council has yet to make that decision.
Its corporate services manager, Alan Dickson, expected a similar rise in premiums and cover to resume from Friday, but said the council had not made any provision in its 2011-12 annual plan to cover rises.
"There is some uncertainty whether we continue to be a member [of Lapp]," he said.
Like Waitaki, his council has a $3 million disaster fund and another $3 million in revolving credit which it can access quickly but has to be repaid.
"Whether we self-fund disaster coverage or continue to seek insurance is an issue yet to be decided," he said.
