Households will pay three times as much for Earthquake Commission cover from 2012.
Owners of insured homes now pay five cents per $100 of insurance cover to the commission, but that will rise to 15 cents from 1 February.
The annual capped cost will rise from $69 to $207 - an increase of $2.60 per week for most households, the Government says.
Finance Minister Bill English says the increase is needed to help cover the costs of the EQC and to rebuild its Natural Disaster Fund and it is fair that the costs fall on homeowners, as they are the beneficiaries of that insurance.
Mr English acknowledges this will put pressure on some homeowners fully stretched servicing their mortgages, but says in order to shore up the EQC's finances it is an extra bit households will be able to handle.
Even with the levy increase, it will still take the Natural Disaster Fund 30 years to get back to its pre-earthquake level of $6 billion.
The money raised from the levy will go up from $86 to $260 million per year. That will reduce the contribution taxpayers have to make to cover the EQC cash shortfall from $1.4 billion to $490 million.
Labour Party finance spokesperson David Cunliffe says it is only fair the levy is increased. However, he says National gave massive tax cuts to upper income earners worth thousands of dollars a week which has added to the Government's debt problem.
Quake recovery group supports increse
A Canterbury earthquake recovery group believes increasing the levy is money well spent.
A spokesperson for Cancern, Leanne Curtis, says her region's experience shows the extra expense is worthwhile.
Ms Curtis says Cantabrians more than anyone else now realise the value of the disaster insurance and the large payouts most people received were a bargain for what the premiums had cost.
She says the Earthquake Commission has been tested in the recent quakes, but has proved its value to homeowners and insurers.
The president of the Property Investors' Federation, Andrew King, says the increase cannot be avoided but is yet another cost to owners on top of rising rates and maintenance.
The Insurance Council says it fears the increase will put some people off insurance altogether.
The Council of Trade Unions says increasing the levy is not equitable and suggests a fairer way to raise funds would be a special earthquake tax targeted at those who could most afford it.
