SUBSTANTIALLY as New
note, this page is under live construction. if you come across it, it might have errors and the info should not be relied on.
the eqc act 1993 says substantially as new
If you hear people talk about a reinstatement they are referring to a form of measurement about a standard of repair to homes damaged by an event (for example, earthquakes) that is meant to be applied by the EQC. The measure is found in the EQC Act. The Act talks about replacement value and defines it as "replacing or reinstating the building (your home) to a condition substantially the same as but not better or more extensive than its condition when new. No Member of Parliament, EQC board member, employee, or agent have the right to change the EQC Act. They are obligated by law to implement the Act as it was written at the time of event that caused the damage to your home. The the EQC Act can only be changed by the government following due process.
pre-earthquake is not a repair of replacement standard able to be used by EQC
Sadly, for many homeowners post the 2010 / 2011 Canterbury Earthquake Sequence, the EQC appears to have used a different standard. A lot of their advertising and internal documentation referred to a 'pre-earthquake standard'. A pre-earthquake standard is much lower than the standard in the EQC Act.
what was the joint statement?
A group of homeowners were so frustrated with the EQC appearing to be using the lower standard of pre-earthquake they sought what is known as a declaratory judgement. A declaratory judgement is a process in our legal system to get a judge to define a point of law.
The EQC said they were always assessing to a standard that would return the home to a condition substantially the same as “when new”. Regardless of who says what homeowners would be advised to be vigilant, ask the right questions and fully understand their rights under the EQC Act.
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but my home is old?
To access insurance your need to do some things the right way, maintain your home and so on. However, just because your home is old it does not give the EQC the right to use any repair of reinstatement standard other than the one in the Act.
If assessors and / or contractors turn up at your home and start saying things like, 'we can't repair that, it would look worse than it does with that bit of earthquake damage', 'we won't be able to make that look very good', 'that is so old we can don't have to replace it' . If you hear anything like that you are dealing with someone who does not understand their obligations under the EQC Act. Anything like this is a big, big red flag, likely indicating you need to intervene, or get someone to intervene on your behalf.
the risks of a lesser standard
If the EQC, or any of their representatives, apply a lesser standard than the one they are supposed to to your home it puts you a position of significant risk. For example:
- Future insurance claims can be denied due to pre-existing damage. Even the EQC can do this to its own repairs. For example, if the EQC under-assesses damage caused by the Canterbury Earthquake Sequence, and you made a claim for new damage caused by the Kaikoura Claim, if the Kaikoura claim assessor identifies damage they think was caused by the Canterbury Earthquake Sequence, you may have little option but to address that damage under the Canterbury claim. Messy huh?
- If you want to sell your home, and a prospective purchaser has a pre-purchase inspection completed and it identifies under-repaired, or missed, earthquake damage, this will stall your sale. It is possible you will struggle to sell the home for the price you deserve.
what can you do to protect your investment?
In our opinion, you take charge of the process by having knowledge. This does not mean taking a 'DIY' approach. Some homeowners did this after the Canterbury Earthquake Sequence, and they were successful. but they really are the exception. For the rest of us we should seriously consider talking with an insurance specialist lawyer of adviser.
After a natural disaster of the type we have experienced, remember you will be feeling shell shocked. Take care of emergency repairs. And, let the EQC follow their process. But.....more to come
The below buttons link you to presentations about this topic from meetings organised by EQCfix.NZ