Small town homeowners under-insured for Kaikoura quake rebuilds

Damage to the historic Cobb Cottage in Waiau in November.
STACY SQUIRES/FAIRFAX NZ

Damage to the historic Cobb Cottage in Waiau in November.

Concern is growing that seriously damaged buildings near the Kaikoura earthquake epicentre are under-insured or uninsured.

Hurunui District Council recovery manager Paul Wylie said while it was early in the insurance process, it seemed some homeowners in Waiau township were facing significant shortfalls from the November earthquakes. This included people who had to rebuild their homes, he said.

"It's between the owners and their insurance companies and EQC (the Earthquake Commission), but anecdotally this is what we understand is emerging," Wylie said.

Waiau in North Canterbury suffered major earthquake damage.
STACY SQUIRES/FAIRFAX NZ

Waiau in North Canterbury suffered major earthquake damage.

"On the face of it, people took a personal risk and they have to live with the consequences. 

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"But it leaves people in a very difficult situation and we're trying to find out what, if anything, can be done to help them."

Michelle Beri says her home in the Waiau Lodge Hotel had insufficient cover with EQC,
STACY SQUIRES/FAIRFAX NZ

Michelle Beri says her home in the Waiau Lodge Hotel had insufficient cover with EQC,

The town was badly affected by the earthquakes which were centred nearby, and at least 25 houses need to be rebuilt. Others have had emergency work done to make them habitable but still face major repairs.

After the Christchurch earthquakes, New Zealand insurers shifted from covering the cost of rebuilds or repairs to new policies paying a pre-agreed sum only. The sum-insured move prompted warnings about under-estimating rebuild costs, especially in cheaper housing markets.

Most homes in Waiau township have rating valuations under $200,000, including some below $100,000. Other damaged towns including Cheviot and Ward also have comparatively inexpensive housing.

The inland road between Waiau and Mt Lyford in November.
JOHN KIRK-ANDERSON/FAIRFAX NZ

The inland road between Waiau and Mt Lyford in November.

Insurance Council chief executive Tim Grafton said many homeowners had not got to grips with what sum insured meant and could be caught out.

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"People need to understand that 'sum insured' is the cost of rebuilding their property, it's not the current value of the property which may be fairly low," Grafton said.

Waiau hotelier Michelle Beri said her home in the Waiau Lodge Hotel had insufficient cover with EQC, while the private insurance cover on the business part of the premises excluded natural disasters.

Earthquake damage to Leslie Hills Rd heading to Waiau.
ALDEN WILLIAMS/FAIRFAX NZ

Earthquake damage to Leslie Hills Rd heading to Waiau.

There would not be nearly enough to rebuild "unless I win Lotto", she said.

"We were paying $2000 a month. We thought we were fully covered but then you find out you're not.

"It's our fault, you've got to read every single word of the policy."

Beri said she knew of people in the town without insurance cover.

Wylie said that as well as insufficient insurance cover, some owners of rural properties had damage to land, plant or outbuildings that could not be insured.

Hurunui Mayor Winton Dalley said he was aware there were homeowners without insurance, and several who were under-insured.

"It's not a large number, but it's significant for the people in that position," he said.

 - Stuff

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