Failed EQC repairs

Here is a link to my interview with John Campbell on Checkpoint about issues with EQC work and claims.

Interest on EQC payments

Since the commencement of the Interest on Money Claims Act 2016 on 1 January 2018 EQC is now exposed to a liability to pay interest on late EQC payments from the date the money ought to have been paid until it was paid.  Previously the Court said it would only order EQC to pay interest as part of a substantive court judgment for the unpaid amount(s).  The new liability applies to court proceedings commenced after 1 January 2018.  It is an incentive to sue EQC now if you have not been paid as interest will be a substantial amount.  Here is a link to an interest calculator.

EQC & New Apportionment of Damage Method

Under the Earthquake Commission Act 1993, EQC has to apportion the damage/cost between earthquake events as there is a cap per event that is usually $100,000 plus GST per event.  Where there were damage inspections between quakes then it is straight forward to apportion based on actual damage.  In the past EQC has apportioned damage in the absence of inspections based on damage % in the area.  It has now taken to apportioning based purportedly on remedial costs on properties  in the area.  It is important to get from EQC in relation to apportionment the addresses of the properties used by EQC, details of the method of construction of the properties and details of the remedial costs and method that it assessed the apportioned repair cost.  It must provide this information.  The court has ordered it to provide this information in cases.

EQC claim assignments

The recent case of Xu & anor v IAG & anor [2017] NZHC  1964 said that an insured home owner could not assign to a new owner the reinstatement rights under an insurance policy.  The decision is subject to an appeal to be heard May next year.  EQC in this publication on its website confirms that

Where an EQC claim is assigned, the assignee (the person receiving the benefit of the claim, for example a purchaser) will have the same entitlement(s) under the Earthquake Commission Act as the original owner. That means they will receive any remaining entitlement up to EQC’s cap for an event.

 

 

 

Earthquake damage or Pre-existing.

In He v Earthquake Commission and ors [2017] NZHC 2136 the High Court (Dunningham J) had to decide whether the damage to Mr He’s property at 377 Selwyn Street, Addington was caused by the earthquakes or not.  The judgment records that over the life of the proceeding Mr He had engaged 6 different structural engineers.  The judgment also records that the tenant of the property at the time of the earthquakes supported EQC and the insurer that the damage existed before the earthquakes.  Predictably Mr He lost.  A surprising case to run to trial.

EQC Kaikoura Earthquake Claim Progress

Progress reported on Kaikoura earthquake claims

16 August 2017

Just over one-third – 34% – of the 38,000-plus residential claims from the Kaikoura earthquake managed by EQC and private insurers had been settled at 31 July 2017, EQC says.

In a progress report on insurance claims from the earthquake, EQC says 62% of building claims had had their initial assessment completed at 31 July – up from 51% assessed and 28% settled at 30 June.

So far EQC says it has paid $39.1 million to insurers who manage EQC customers and $21 million to customers that EQC manages (land and/or properties with open or unresolved claims for prior natural disaster damage).

It says the focus continues to be on the hardest hit communities within Marlborough, Kaikoura and Hurunui, meaning assessment and settlement progress there has been greater.

EQC is on track for “the majority” of Kaikoura earthquake customers to receive their settlements by the end of 2017, it says.

Kaikoura MOU Variation

EQC also says that private insurers and EQC recently signed a variation to the Memorandum of Understanding relating to Kaikoura earthquake claims management.

The original MOU covered the management of EQC claims for damage arising from earthquakes centred “in and around” Kaikoura between 14 November and 13 December 2016. The variation extends the time period of the original MOU and now covers EQC claims for damage arising from earthquakes “in and around” Kaikoura from 14 December 2016 through to 13 December 2017.

EQC says the effect of the variation is that if a homeowner has previously lodged a Kaikoura earthquake-related EQC claim, the new claim will be assessed and settled by the same insurer who managed their previous Kaikoura earthquake-related EQC claim.

If a homeowner is lodging an earthquake-related EQC claim for the first time as a result of another Kaikoura area earthquake, the claim is for land damage, or they have an open EQC claim from a previous event (such as the 2010-2011 Canterbury earthquakes), their claim will be managed by EQC.

Earthquake Insurance assignments- indemnity only

In Xu & anor v IAG & anor [2017] NZHC 1964 the High Court (Nation J) decided that reinstatement rights/benefits were not assignable to a new owner where the earthquakes occurred before the new owner took ownership and the previous owner purported to assign the rights/claims by a deed of assignment.  So the new owner was only entitled to indemnity value as an assignee.  The rights under the policy were held to be personal rights of the insured.  The High Court applied the Court of Appeal decision in Bryant v Primary Industries [1990] 2 NZLR 142.  The Xu decision will be subject to an appeal.   It will cause problems for assignees and maybe people that gave advice about recoverability.