FAQ
01. What is the definition of "as when new" that EQC is required to meet?
“As set out in the Joint Statement, insurance under the EQC Act insures houses for replacement value, which includes the cost to reinstate a house to substantially the same as (but not better or more extensive than) its condition “when new” and the cost of complying with any applicable laws.
The Court’s approach to “as when new” has been that a new building or a repaired item needs to be equivalent to the original. Equivalence does not mean an exact replica. Factors to be considered are function, aesthetics, character and appearance. Additionally all new work must comply with the Building Code.”
“As when new does not have a specific definition. “When new” refers to the condition it was when built, however the obligation to comply with applicable laws is overlaid on that and may result in improvements. In cases where replication is not possible then the overall question will be whether the same function / amenity / value / aesthetic is achieved. ”
02. How do the MBIE Guidelines work with that definition, and can the Building Code be used to define "as new"?
“As set out in the Joint Statement, EQC has accepted that the MBIE dislevelment indicator criteria, which indicates that no repair is required, is not a sufficient reason for EQC not to cover the relevelling of the floor. Further, if the floor is to be relevelled, the relevelling required is determined by the EQC Act and not by the MBIE Guidance criteria. Earthquake damage should be fixed, unless the damage is so minor it falls within accepted building tolerances for a new house.
It is possible that adopting repair methodologies set out in the MBIE Guidance may achieve the “as when new” repair standard. That depends on the nature and extent of the damage and the circumstances in the particular house.
Building work that complies with the Building Code may not necessarily achieve the “as when new” repair standard. Again it depends on the nature and extent of the damage and the circumstances in the particular house. For example, work may comply with the Building Code but it may not be equivalent in terms of function, aesthetics, character and appearance.
It is important to appreciate that different insurance policies have different definitions of the insurer’s repair standard. Therefore, if your claim is with your insurer you need to check the definition in your Policy.”
“No, the Building Code, Building Act, and MBIE guidelines do not provide any guidance as to the repair standard under the EQC Act. The MBIE Guidelines are useful guidance of acceptable repair methodologies which will in most cases (if properly completed) meet the Building Code and Building Act. However the two standards (meet Code / as when new) must be viewed as separate and distinct requirements. The existence of one is not an indication that the other has been achieved (or not achieved). ”
03. What recourse is there for homes that have been fixed, or cash settled, to a lesser standard than "as new"?
“A If EQC has repaired the home, or elected to pay cash rather than repair, to a standard less than the EQC “as when new” standard, the homeowner is entitled to require EQC to do everything necessary to meet the statutory repair standard. Options include:
1. Ask EQC to renew the repair/cash settlement – refer to EQC’s website for the process EQC wishes homeowners to follow. You should supply as much evidence as you can to show that the EQC’s scope of works was inadequate.
2. File a complaint with EQC – refer to EQC’s website.
3. Sue EQC for breach of its statutory obligations. The homeowner should seek legal advice from an insurance law specialist (free advice may be available from the Community Law Centre, Residential Advisory Service, or Canterbury Insurance Assistance Service).
4. The position may be different where the homeowner has “opted out” of EQC’s Canterbury Home Repair Programme. In that case, the homeowner is likely to have agreed to take on the risk that the scope of works is inadequate. However, EQC remains liable for any additional earthquake damage that had not been identified by the EQC assessments.”
04. Can someone who has purchased the house after EQC has repaired or "cash settled" pursue EQC for failing to meet the repair standard?
“Yes. A claim for defective repairs may be made by a subsequent purchaser. A claim for insufficient payment may be made if the subsequent purchase has had the original owner’s rights under their insurance policy assigned to them. The position may be different if the original homeowner “opted out” of EQC’s CHRP. You should seek legal advice. ”
“Wherever building work has been done on a home and it is defective the homeowner will have rights under the Building Act (section 362I) and under the general law of Tort. Those claims may be made against builders, project manager, etc (and arguably insurance companies or EQC where they had control of the project). It is more difficult to claim under the insurance policy or the EQC Act when you are a subsequent purchaser (especially if you did not take an assignment of the claim rights).”
05. What is the effect of EQC's delay on the limitation period for putting a claim against EQC or the insurance company once the claim goes over cap?
“The delay of EQC has no particular affect on limitation. The exact commencement of the limitaion period is unclear, and EQC’s position is not particularly clear either. Caution is advised. Obtain a clear waiver of limitation or (as a last resort) commence proceedings prior to September 4 2016.”
* If you have concerns regarding the Limitations Act and the six year limit it imposes on your claim(s), use the template letter on this website to seek clarification from your insurer.
06. Where a house has matching tiles in several areas of the house, does the "as new" settlement mean that EQC must replace all tiled areas so that they match, even if only one area has damage?
“This will depend on the particular circumstances in the house and the nature and extent of the damage. In many cases, matching tiles should be provided.”
“Probably not. In general terms an insurer is obliged to replace a damaged element - and to match to the surrounds to meet the aesthetic requirement. While the matter will be one of degree, in some cases a slight mismatch between tiles in different rooms will have no appreciable negative affect, aesthetic or otherwise. ”
07. Does the Action Group settlement extend to retaining walls, when EQC has stated they will only pay indemnity value?
“No. Retaining walls are dealt with separately in the EQC Act and only indemnity value cover is provided.”
08. Where unconsented work has been carried out by EQC and found to be wrong, what can be done to get EQC to repair so that a code of compliance can be issued?
“See Question 4 for this answer”
09. In a situation where EQC has performed a failed repair and the insurer refuses to take over liability, what are the claimant's rights given that the claimant's contract is with their insurer rather than EQC?
“This is a complex issue and the homeowner should seek professional advice.”
“The issue is whether there is unrepaired earthquake damage which is over cap (and which is therefore the insurer’s liability) or whether there is a defective repair by EQC which requires remedy (which is an EQC issue). Unfortunately in many cases it will be a mix of the two and both EQC and the insurer will seek to shift blame. In such a case seek advice.”
10. What costs/damages will EQC be liable for?
“The Action Group’s legal proceeding was for declarations in respect of EQC’s statutory obligations and it did not seek damages. The costs of the legal proceedings have not yet been determined.
Where EQC’s repairs are defective, EQC is liable for the cost of remedying the defects plus consequential losses. However, before the homeowner proceeds with any re-repair, they should notify EQC and seek professional advice.”
“There is no reason why EQC should not be liable for costs and damages, however the real barrier is the cost and trouble of pursuing EQC. The possible claims include damage for breach of the statutory duties in the EQC Act, and damages in negligence for defective works. In addition to the obvious cost of repair / remediation it would also be possible to claim consequential losses (such as alternative accommodation) and general damages (such as damages for stress, anxiety and loss of amenity of the home). However awards of this kind are often modest in size ($15,000 - $25,000) and costly to pursue in the Court.”