Opportunities and Risks
Dr Duncan Webb, Lane Neave
26 June 2017
If you are in any doubt about your claim it is recommended you seek legal advice.
Can my insurer insist?
In some policies the insurer has a right to pay the cash equivalent of repair or rebuild but:
Did the insurer make an election to repair themselves?
Has the insurer represented that they would manage?
- Good faith…
Rebuff threats in respect of repair / rebuild contract timelines.
Full and final
Insurer cannot insist that your settlement is “full and final”.
Beware of full and final agreements if you are going to repair.
May be advantages to full and final agreements where you intend an outside of policy solution.
When should I agree to a full and final settlement?
When risks are low.
When you are wanting to depart from policy
Waiting before undertaking repair
Buying two properties
Note the terms of the settlement agreement
Repair / rebuild / reinstate / replace?
In general must spend on reinstatement.
Can I ask for more cash later?
Not if the agreement was full and final:
Limited exceptions (such as fraud)
Partial settlements are possible. Insurers may agree to pay more for:
Increased foundation costs
Insurers will provide an estimate of the reinstatement costs
No estimate is perfect
The more work is done the closer the estimate is likely to be
Costings need to:
Identify the damage
Have a realistic reinstatement proposal
Be costed at open market rates
Capture all costs (design, consenting, professional advice etc).
It is often wise to take professional advice on costs
Partial settlement: Costs
If the insurer is not managing the repair then the homeowner is entitled to incur reasonable costs.
Insurer not entitled to:
Dictate professionals to use
Place caps on cost
In reality there is a need to agree process / project with insurer.
Full and final: Lookouts
- As / when new
- Modern materials and methods (equivalent, not cheapest)
- Modern building standards / regulatory upgrades
- Design / consent / survey / engineer
- Project management
- Contingency / risk
Keep a look out for exclusions for defects / pre existing condition etc.
- What is your ideal outcome?
- What is your worst case?
- How much risk can you assume?
- What is your appetite for conflict?
- Consider the benefits of finality / control
- Be pragmatic and reason-based
- If in doubt take advice from a third party