A landmark settlement successfully taken against EQC by 98 Canterbury Homeowners will see hundreds of reappraisals of residential earthquake repairs.
The homeowners asked the EQC to pay for repairs that would bring homes back to an as new condition, instead of relying on Ministry of Business, Innovation and Employment (MBIE) guidelines.
MBIE’s guidelines were to repair to a pre-earthquake standard but with the landmark settlement repairs now need to be to “as new” standards using current materials available.
As a result of the settlement, carrying out an independent damage assessment where the repair standard is “as when new” could result in scope proposals listing a greater level of repair works, which may require building consents. Repair values are also likely to be higher.
For insurers this could mean a new flood of claims, for homeowners the start of a new process, dealing with their insurers to reach settlement.
Most insurers will start again at the beginning and complete new independent damage assessments to ensure that the final repair solution is in line with their policy wording and to provide evidence to their reinsures that the repair proposal is fair for all parties.
Prendos Director Rory Crosbie said clients seeking re-appraisals of damage, where the repair proposal is to be to ‘an as when new standard’ and considering undamaged parts of a property such as replacement of old wiring due to completing earthquake damage repairs, will result in higher value claims.
“We have completed independent assessments of properties on the above basis where the value of the claim is over cap.”
“Until now, some homeowners have been unable to get the claim over cap. This settlement, which agrees to return damaged elements to a condition ‘substantially the same as when new’, will now make it easier for homeowners to exceed the EQC cap.”
EQC is liable for costs below “cap”, usually $100,000 plus GST. The private insurer only becomes liable when the cost for a single event exceeds the cap. EQC is liable if each event is below the cap, even if the total damage costs exceed the $100,000 plus GST.