One Owners Case Study Shows an EQC Failure Rate of 86%

The following has been provided to us to share on the basis the writers identity is kept anonymous. We have agreed to do so in this instance. Whilst we can confirm this is a legitimate property owner, the experience outlined is the experience of the author, eqcfix take no responsibility for the opinions, and nor has it factually verified the information. The author may be willing to speak with media.

 
 

Here is a short summary of my experience with the EQCs response to the natural disasters for my property portfolio.  All seven investment properties that I owned at the time of the earthquakes that were insured are detailed below.

This case study is shared with you (with my name removed) as a look into the EQCs performance in Canterbury and maybe to identify some of the systemic issues that exist and the looming risk should the EQC not properly address them. I have referred to the properties by suburb so that they are not able to be individually identified, but at the same time, you will be see that the properties are spread across Christchurch not in any one particular suburb.

EQCs initial response:

  • Property 1 (Upper Riccarton), assessed by the EQC as being cosmetic repairs and cash settled for around $15,000 in 2015.
  • Property 2 (Bryndwr), assessed by the EQC as being mainly cosmetic repairs and cash settled for around $75,000 in 2015.
  • Property 3 (St Albans1), assessed by the EQC as being cosmetic repairs only and cash settled in 2013 for around $15,000.
  • Property 4 (St Albans2), assessed by the EQC as being cosmetic repairs only and cash settled in 2015 for around $18,000.
  • Property 5 (Woolston), assessed by the EQC as being cosmetic repairs only and repaired by them in 2011 (repair value approx. $20,000).
  • Property 6 (Riccarton), assessed by the EQC as being cosmetic repairs only and repaired by them in 2012 (repair value approx. $40,000).
  • Property 7 (Belfast), assessed by the EQC as being cosmetic repairs only and repaired by them in 2012 (repair value approx. $20,000).

Due to some legitimate concerns with the EQCs performance, I initiated independent reporting for six of the properties to properly investigate the earthquake damage and advise on appropriate reinstatement's. I supplied the EQC with the results of that reporting to give them a chance to address the issues for each property (for both repaired and cash settled properties). The following is the result of that review and summarises the EQCs accepted position for each property as it stands today (Jul 2017).

EQC's subsequent response:

  • Property 1 (Upper Riccarton), - no change, EQCs assessment of cosmetic damage was correct and house has been remedied.
  • Property 2 (Bryndwr),- EQC has reassessed the property as significantly structurally damaged and placed the claim over cap and it is with my insurer awaiting resolution. EQC revaluation of repairs $316,000.  Insurers figures show the house is ‘beyond economic repair’.
  • Property 3 (St Albans1),- EQC has reassessed the property as structurally damaged and placed the claim over cap and passed on to my insurer. Insurer has cash settled the property for rebuild as it was finally assessed as ‘beyond economic repair’.
  • Property 4 (St Albans2),- EQC has reassessed the property as structurally damaged and placed the claim over cap. It is now with my insurer working through resolution. EQC revaluation of repairs was $160,000 though this does not include significant remediation required for mould damage due to liquefaction under the dwelling that the EQC failed to identify.
  • Property 5 (Woolston),- EQC has reassessed the property as structurally damaged and in need of significant foundation work and valued the re-repairs at around $70,000. The scope of repairs is currently under review as the EQC appear to have missed significant expense which could push the claim over cap.
  • Property 6 (Riccarton), - EQC has reassessed the property and paid an additional settlement amount of around $8,000 for failed cladding repairs.
  • Property 7 (Belfast) – EQC has reassessed the property and paid an additional settlement amount of around $12,000 for failed cladding repairs.

Summary of the EQCs performance across the seven insured properties:

  1. Of the seven properties, the EQC properly identified the damage and applied an appropriate remediation strategy for only one.
  2. The EQC initial assessments missed significant structural damage (for foundations) for four out of the seven houses.
  3. The EQC have reassessed and admitted the errors and have now settled the claims for all bar one (Woolston).
  4. For six out of the seven houses, the EQC initially failed to properly assess the damage and apply appropriate repair strategies. Four of those relate to missed structural damage to foundations. Two of those relate to inappropriate repair strategies to exterior cladding systems.
  5. A common issue present across the initial assessments for all of the houses was the EQC appear to have not used appropriately qualified and trained staff to assess potential structural damage to houses, though four out of the seven houses displayed signs of structural damage.
  6. A common issue present across six of the seven houses (where more than a simple cosmetic fix was required), was that the EQC appear to have applied an incorrect standard for the remediation (pre-earthquake, rather than ‘when new’ as required by the EQC Act).

EQCfix.NZ Ponderings

What this study shows is of the seven properties assessed by EQC only one was assessed correctly (an 86% failure rate). EQC missed significant structural damage in four of the seven properties (a 57% failure rate).

Minister Brownlee, responding to questions in the House, recently stated that there were 7.9% call back requests. Call back requests are reliant on the homeowner knowing their home had missed damage and the owner initiating contact with EQC. What Minister Brownlee does not know, in fact no one knows, is how many properties were under scoped and what the real rate of failure is. Find Mr Brownlee's response HERE.

We already have one devastating example of the outcome of damaged missed by EQC and the subsequent impact on future property owners, there are likely to be many more in the years to come: 

Georgia Scott and Mike Rodgers are living in their backyard sleepout, with their two young children top and tailing in one bed, after their Heathcote Valley home was left uninhabitable.Their insurance nightmare began 14 months ago when a fire on the day they moved in revealed EQC's repair for the home's previous owner was severely inadequate. Read the full story HERE.
Tim Grafton, CEO of the Insurance Council of New Zealand (ICNZ) has stated that the Council could not agree to a proposal put forward by Mr Peter Woods of Anthony Harper. That proposal was to have members agree to defer their Limitation Act defence until at least 12 months after EQC notified the claim as overcap. Refer: Article HERE

Tim Grafton, CEO of the Insurance Council of New Zealand (ICNZ) has stated that the Council could not agree to a proposal put forward by Mr Peter Woods of Anthony Harper. That proposal was to have members agree to defer their Limitation Act defence until at least 12 months after EQC notified the claim as overcap. Refer: Article HERE

Canterbury property owners deserve to know the severity of the situation. It is highly probable homes have been on sold as repaired to the standard stipulated by the EQC Act when in fact those homes have significant damage, much of it likely to be structural.

With the risk of Limitation on the immediate horizon, EQC, and therefore the New Zealand tax payer, we may find the insurer using Limitation as its defense, homeowners will have no other choice but to hold EQC liable, with the full brunt of those costs landing in the lap of New Zealand tax payer. An inquiry is long overdue.

Concerned, What Can You Do?

  • Review the material we have provided on Limitation.
  • Send your private insurer a letter asking for an extension on Limitation, template HERE.
  • Request a review of your EQC claim HERE
  • If you are a subsequent owner ensure the EQC claim / private insurer claim has been assigned.
  • We highly recommend you contact your lawyer / engage a lawyer and work with that lawyer to identify a strategy to prove loss and manage the risk of Limitation. If you are not able to afford a lawyer then contact Community Law.
  • Write to your local MP and make your situation known.
  • Join Facebook Groups such as TC3 Residents.
  • Like our Facebook Page, and join our community, so you keep up to date with information.
Melanie Tobeck