Lessons learned from the Christchurch Earthquake: Insurance and EQC claims 23 Nov 2016
Painting is easy when you don't know how, but very difficult when you do. Edgar Degas
Our experiences over five years ago in Christchurch have unfortunately been brought to life again by the recent earthquake and the damage suffered in North Canterbury, particularly in Kaikoura. We know the power of an earthquake and have for several years now been helping our clients achieve good outcomes on their EQC and private insurance claims.
Reflecting on what we have learned over these years has resulted in the thoughts set out here. As the quote above indicates, sometimes with a little knowledge something can appear easy when in fact, digging a little deeper, it is much more complicated and difficult than you realised. Doing the hard work though, whether it involves painting or something else (like insurance claims), will result in a better outcome.
Our intention in sharing these thoughts is to proactively assist those who may now be at the start of a journey they weren’t anticipating and who could benefit from what we have learned about EQC and insurance claims. We are talking here about homeowners; for those with commercial premises and businesses there will be other points to consider (we have done a separate article for those who may have had businesses interrupted which you can access here.
The following are the most important principles to be aware of, and steps you should take, to help achieve a positive outcome with your EQC or insurance settlement:
Make an EQC claim and an insurance claim straight away if there is evidence of damage to your property.
Notify your insurer even if you think the damage is only cosmetic. By submitting the claim you enter the system. While you do have 3 months to submit claims, we recommend doing it sooner rather than later so that the wheels can start turning.
Take good photos of damage and also source or retain any photos (or reports) you have of your home before the quakes. Don’t rely on EQC or your insurer to record the damage.
This lessens the risk of a dispute over what is and isn’t earthquake damage and, should there be any further earthquakes, what damage was caused by each event. That can become relevant where claims have to be shared over more than one earthquake, which has been an issue in Christchurch.
Not all insurance policies are equal - get advice on your policy/EQC entitlements before doing anything further.
This not only ensures you know what you are entitled to from EQC/your insurer but also ensures that any professionals you use to help quantify your claim do also. In a number of cases we've dealt with, engineers/quantity surveyors haven't been properly briefed in line with policy/EQC entitlements so cases have either been overstated or understated. This can stymie negotiations and cause delay and further expense.
In this regard it is worth mentioning that sometimes legal fees are covered by home insurance policies which may mean that your insurer will cover any fees you incur clarifying your entitlements.
It can pay to be proactive and obtain your own professional advice (i.e. engineering) up front.
The EQC process can be a long and slow one. You may be better served getting your own advice early on in the piece, rather than waiting for an assessment.
If you do obtain professional advice, make sure the evidence you obtain is going to be robust and stand up to scrutiny.
While companies purporting to specialise in earthquake assessments and repairs may save you some initial costs, in our experience those assessments may not stand up to scrutiny when push comes to shove. Use reputable structural or geotechnical engineers, land surveyors and quantity surveyors – it will ultimately save you time and cost in the long term.
Appreciate upfront that that the onus is on homeowners to establish their loss rather than on EQC/insurers.
Therefore, while insurers/EQC usually carry out assessments, if you disagree, it's not actually up to EQC/the insurer to prove their assessment. Rather, you need to obtain your own evidence, be it engineering, quantity surveying advice etc. In some cases EQC and insurers will cover these costs.
Watch out for cowboy contractors.
There are a lot of people making a lot of money from an unfortunate situation and we have seen situations where vulnerable people have been taken for a ride. To avoid this, ask for testimonials and evidence of their work.
Also, watch out in particular for contingency arrangements where you pay a cut of your insurance or EQC settlement to the company assisting you. It may seem they are taking the risk or the hassle away from you but, in our experience, often insufficient work is done to ensure you get the best result you can.
Be satisfied with any scope of works before any repair work begins or before you receive a cash settlement.
If repairs are being carried out for you, you want to ensure that all damage is reflected in the scope and the repair methodology is correct. Once repair work begins, you don’t want additional issues to arise, particularly if you have moved out for the repairs. That can mean the work has to stop while the issues are resolved, which can cause significant delays as well as issues with ongoing temporary accommodation. As always, get advice on the scope from appropriate professionals.
Similarly with a cash settlement, you want to ensure that it covers all damage and provides the correct repair. Once you’ve settled with EQC or your insurer, you don’t want to find that the cash settlement is insufficient to cover the actual cost of repairs or a rebuild. We have found, for example, that a quantity surveyor’s costings may differ markedly from those of EQC or insurers.
If EQC or the insurer is doing the repairs, also be aware that any building contract presented at the back end of the process is not a mere formality.
It is a document that requires careful consideration/advice. Inadequate attention to it can result in other issues once the repair/rebuilding work begins and may be counterproductive to the whole process. Again, many insurers pay for legal advice on these contracts.
Finally, as the cliché goes “patience is a virtue”.
Unfortunately, throughout the process, patience may be something you need in large supply. Dealing with EQC and insurers can take time and a lot of effort so it is good to try to reduce stress levels where you can but anticipate that it may take longer than you think to get through.
As we noted early on, when you look into something it may seem harder and more complicated than you first thought. However, if you embrace the challenge, you can achieve a successful outcome. With EQC and insurance claims, the hard work of preparation is key. We hope that the information provided here has been helpful to better prepare those now needing to make an insurance and EQC claim.
Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. Please contact Paul Cowey at Parry Field Lawyers (03 348 8480) firstname.lastname@example.org