Local Government New Zealand says rates could go up as insurance costs balloon for councils.
Local body insurer Civic Assurance has told the 46 councils it covers their policies will not be renewed when they expire on Thursday.
The company says it is facing $750 million of earthquake-related claims from Canterbury councils and has been unable to secure further re-insurance as a result.
Many councils say they have been able to find other insurance, but it is costing up to four times more.
Local Government New Zealand president Lawrence Yule, who is also mayor of Hastings, says it is putting a lot of pressure on councils.
"Dunedin's insurance costs have gone up $1 million and the authority I'm the mayor of our costs have gone up by over $500,000 for insurance. So it's already having an impact on the operational costs of the councils."
Mr Yule says it is likely insurance companies will not take on underground assets, such as water and sewerage.
The Auckland Council says it is insured with another company and the policy runs until April next year.
Chief financial officer Andrew McKenzie would not say whether he expected higher premiums when the council next sought insurance but that budgets had been set prudently.