Home buyers face insurance freeze
Marlborough home buyers are being warned to ensure they can get insurance before signing final sale agreements.
The 6.6 magnitude quake that caused widespread damage to Marlborough homes and businesses on August 16 has prompted insurance companies to put a freeze on any new insurance policies.
New Zealand Insurance Council chief executive Tim Grafton said the same thing happened after the July 21 quake, while insurers assessed quake damage and risk.
The earlier embargo lasted for about two weeks.
The new embargo affected people seeking insurance in the centre of the country, including Marlborough, Nelson and wider Wellington, Mr Grafton said.
"It's their call when they lift the embargo, it just depends on the amount of seismic activity taking place."
Gascoigne Wicks commercial and property solicitor Rob Andersen said people needed to be particularly careful when entering into agreements to buy property while the embargo was in place.
"Your agreement for sale and purchase needs to reflect the current risky situation. This means considering if there is current or may be future damage to the property and putting in place arrangements to deal with the current insurance environment."
Home buyers should contact their lawyer before signing sale and purchase agreements, so they could add special clauses such as making the contract conditional on obtaining insurance. Those who had signed a purchase agreement before the quake, that had not yet gone unconditional, should ensure they received written assurance from the insurer of their intention to issue a policy, Mr Andersen said.
If the agreement was already unconditional and the buyer did not have insurance, they needed to "shop around" as soon as possible.
In some cases, the vendor's insurance company could sign the existing policy over to the purchaser. This method was adopted in Christchurch, and was largely accepted by insurers, he said.
First National Real Estate co-owner Owen Norrish said they had added a clause to sale and purchase agreements immediately following the July 21 quake, making them conditional on the vendor's ability to secure insurance.
"While there is an embargo in place it's not a complete barrier to getting insurance," he said.
"Everyone we've dealt with in the past month has been able to find a way to get cover . . . insurance companies seem to be prepared to find a way to work their way through it."
Harcourts Marlborough sales manager Chris Greenhill said they had learned a lot from the Christchurch quakes, and were inserting an insurance clause into all contracts.
Some insurers, including New Zealand Insurance, State and AMI, were still underwriting new insurance and transferring existing policies, she said.
However, each policy was looked at individually, and existing customers were given priority.
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