A question came to us this week asking why a contractor would stop work on the insurer’s advice if the homeowner started legal proceedings. We put the question out there and Samson from ICNZ has given us the following responses. We are awaiting a response from EQC.
We suggest if you have raw sewerage issues and your insurer or PMO is refusing to do the work, get the manager on the phone and ask what their decision was based on and what alternatives there may be to deal with the issue.
Are there legal or policy constraints on an insurance company that prevent them from being able to do any works or is it an in-house decision not to do so?
If there is legal action taking place, it can preclude an insurer from doing further works – particularly if these works are the subject of the dispute. However there are other ways that an insurer can meet its minimum obligation, such as paying indemnity value or cost of repairs to the customer even if they are disputed, but this will vary from insurer to insurer.
Does this also apply to works including lifeline work – power, sanitation, water? If people have raw sewerage issues is an insurer obligated to address the issue regardless of the claim being disputed through court action?
It could apply to those works (if that was the in-house decision of that insurer). An insurer is not obligated to carry out temporary emergency works, but may choose to do so. In some cases, an insurer may be willing to carrying out emergency repairs for customers that are in dispute. If the insurer can’t carry out the work, it is may be due to the customer not wanting the proposed repair (i.e. the insurer intends to carry out a permanent repair, rather than temporary repair – customer doesn’t want this as they believe the house is a rebuild).
Do all insurers stop work or is it an insurer-by-insurer decision?
This is a matter that is considered on an insurer by insurer basis.