The 2016 Kaikoura Earthquake caused unprecedented damage in Kaikoura, Hurunui, Marlborough and Wellington. Thousands of homeowners suffered damage in the earthquake and subsequently lodged insurance claims.
Many affected home owners were worried that their claims could be delayed similar to claims in Canterbury following the earthquakes of 2010 and 2011, where some claims waited more than six years for a resolution. In response, the Insurance Council of New Zealand and EQC agreed to streamline the claims process for homeowners, by implementing the following two key features:
- All claims are cash settled; and
- All claim management is carried out by the home owners’ private insurer and not EQC.
While the streamlined claims management system has resulted in a more efficient process for some claims, there are still issues. The issues we see homeowners having include:
- Insufficient or inadequate communication from the insurer;
- Engineering assessments which do not properly cover everything they should;
- Claims being settled based on scopes of work which do not contain full detail which results in claim payments not being enough to complete the work needed;
- Claims being settled for amounts that do not reflect the full extent of the damage and/or the homeowner’s entitlement under the policy.
An insurance claim is a valuable asset, and it is important that homeowners make fully informed decisions when dealing with their insurance claim. This is particularly important when it involves most people’s biggest asset – their home. We encourage all homeowners to ensure their property is being repaired properly and their insurance company has met all of its obligations under the insurance policy.
If your property was damaged in the earthquake, even if your claim has already been settled for less than $115,000 (the EQC cap amount), you should consider the following questions:
- Is the scope of works sufficiently detailed for a builder to be able to repair all of the earthquake damage?
- Is there structural damage? If so, have any geotechnical investigations been carried out? Have any structural engineers been engaged?
- Has there been an appropriate allowance for professional fees?
- Has there been any allowance for project management costs given that you are now expected to project manage the repairs?
- Has there been any allowance made for contingencies to provide protection against the risk of delays in construction and unknown additional costs?
If you are yet to settle your claim you should ask your insurer:
- For reasons detailing the cause of the delay in settling your claim;
- For copies of all engineering reports and damage assessments;
- To specify the steps to be followed in order to settle your claim:
- To provide a reasonable timeframe for settling your claim.
At Morrison Kent Wellington, our specialist insurance lawyers have vast experience when it comes to dealing with earthquake claims. If any of the above circumstances apply to you, or you have any questions on queries regarding your insurance claim, please do not hesitate to contact a senior member of our insurance team: