Five years on from the February 2011 earthquake some of the more complex insurance claims are starting from the beginning as case by case EQC deem their claims to be over-cap, potentially as a result of applying the “as new” repair standard.
While most commercial and residential insurance claims have now been resolved, the remaining complex claims are now slowly being addressed.
In the last six months EQC passed 700 claims over to the insurance companies when it was agreed that the cost of repairing the damaged properties to an “as new” standard in line with building code requirements were in excess of $100,000.00 plus GST.
It comes after the recent ruling that EQC’s repair obligation “as new” may change current damage repair solutions for some properties. The “as new” requirement now aligns to that of most insurance policies responses.
For example, where cladding systems were damaged, the “as new” wording of insurance policies prompted insurers to complete invasive investigations on some damaged cladding systems to satisfy them that the repair solution complied with the building code.
“Applying the as new wording may result in quite a different and more expensive repair solution for the damaged property,” Prendos Director, Registered and Chartered Building Surveyor Rory Crosbie said.
“Some under-cap repairs following a lesser standard of repair may not have complied with the minimum standard of repair – the building code. Potentially, some repaired properties still do not comply, having been incorrectly repaired.
“Those negotiating through complex claims are dealing with potentially another few years of uncertainty, and are aware of the looming deadline that relates to the Limitation Act.”
He said to ensure a satisfactory outcome, reduce uncertainty and avoid unnecessary stress, the insured are well advised to retain expert technical and legal experts to manage and assist with the claim settlement process.
Over the last five years the Christchurch Prendos team has considered each claim on their own merits but have applied the same basic principles of damage assessment and repair advice to reach successful settlement solutions.
“The key to reaching successful outcomes depends on seeking the right technical experts to complete independent earthquake damage inspections. This allows an accurate repair scope proposal to be produced so the quantity surveyors can value the true cost of the claim.
“Once the technical insurance investigation reports have been prepared, insurance brokers and lawyers with knowledge of how insurance policies should respond to the event ‘damage caused by the earthquakes’ can generally negotiate the settlement of the claim to the satisfaction of both parties without the need for embarking on costly and lengthy legal process.” Mr Crosbie said in his experience over the last five years, early involvement of the appropriate experts usually results in quicker settlements.
His Christchurch based team of structural engineers, building and quantity surveyors, have assisted both the insured and the insurance companies dealing with earthquake insurance claims by providing; independent damage assessments; repair methodologies; repair scopes and valuations and rebuild valuations.
He said while many damaged buildings have now been assessed by numerous “experts”, the true cost of repair of those damaged buildings cannot be accurately determined unless damage assessments consider the damage on the whole: damage to ground, structure and building fabric and all recommendations on how to repair each damaged element. These areas of repair are brought forward into a well considered repair scope proposal.
“Some EQC over-cap properties now passed to insurers may well have no geo-technical investigations completed and damaged cladding systems on such claims may require it to be invasively investigated to understand if the earthquake damage has resulted in their failure to now meet the requirements of the building code.”
Insurance brokers predict that the legal battles relating to earthquake claims will occupy the courts for at least the next five years.
“A good starting point to reduce the need to engage in long legal battles is to appoint a team of competent technical professionals to report on ground, structure and building fabric damage and to provide repair and possibly rebuild value estimates.”
In some cases fees for the appointment of such professionals may be covered as part of the final settlement offer.