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Free-Riders with fire insurance

February 14, 2013 Leave a comment Go to comments

NZ Fire ServiceThis maybe useful for Unit 3 of the AS course. The Fire Service in New Zealand is currently funded on levies on fire insurance. However the incidence of fires in the last 20 years has dropped dramatically and the fire service has increasingly been attending to tasks not related to fires – this includes emergency situations like flooding, car crashes, hazardous waste problems to name but a few.

The New Zealand Herald mentioned that approximately 19% of calls for the Fire Service are transport-related incidents but only 8% of funding comes from that sector. Currently people pay a levy of 7.6 cents per $100 of a property’s insured value and this is capped at $100,000 = total levy up to $76 per year. Suggestions have been mooted with the idea of reducing the levy but increasing the cap – 4.6 cents per $100 capped at $250,000 = total levy up to $115 per year.

There is also those who do not insure against fire but still expect assistance from the fire service – between 5-10% of householders contributed no money to the Fire Service. Free-Riders!

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