Cheers
Marcus
– CanCERN Communications Manager

kind Regards

Julie

WHY DOES MY INSURER WANT MY EQC LAND PAYMENT?

This is another good question (there are so many) From one of the EQ pages (there are a few of them too).

The basic point is that insurers insure buildings only and not the land upon which they sit. EQC insurers the land against natural disaster damage – like earthquakes.

This leads to some tricky line drawing. In particular if the insurer wants to rebuild or repair your house then as between you and the insurer the state of your land is your problem not theirs. For example, if your land had disappeared (in a landslip for example) then they would not have to replace the land (though most policies allow for replacement of the house on new land that you would have to provide).

In the present case where there is earthquake damage to the land and EQC is going to pay out on that damage insurers tend to take the view that homeowners should hand that EQC land money over to pay for any “land improvement” that is required to repair or rebuild the house. However the line-drawing that arises is about what amounts to land improvement and what is simply part of building a house.

This is particularly relevant in TC3 land. Clearly (in my view) actual structures are not land improvement – things like deep piles or a rib raft foundation (ie enhanced foundations) are simply part of the cost of building a house on particular land. However things are not so clear in those cases where land is excavated and filled with good ground (engineered fill). While on the one hand it can be referred to as “sub foundation” work it can also be considered ground improvement.

Here are a few things to think about for the insurer to have any claim to land payments:

1. there must be land damage (not just land that is just as crap as it was before the earthquake). The insurer should be asked what evidence they have of that.

2. there must be actual land remediation proposed. This is not just enhanced foundations but actual ground work of some kind.

3. the cost of the land remediation should be costed and the assignment of the payment capped at the costed amount.

Of course at the end of the day insurers do not always agree to these things and it may be that the best thing to do is to try to get the best deal you can and move on even if it is not perfect. While it is unclear at the moment, it seems likely that many homes which have some land damage will receive only modest payments so it may be that even in assigning the land payment you are not giving away a great deal. Always ask for the insurer to 1. use reasonable endeavours to pursue the payment and 2. to notify you when payment is made.