Payouts may come up short
More than 26,000 Canterbury homeowners can now claim cash in lieu of quake repairs after changes to the Earthquake Commission's (EQC) opt-out scheme.
However, quake advocates have warned accepting the settlement could leave homeowners out of pocket.
The commission said yesterday it had "streamlined" the provisions for opting out of the home repair programme by no longer requiring EQC approval of contractor invoices for funds to become available.
EQC national customer and claims manager Gail Kettle said single payments based on the itemised assessed cost to repair the quake damage would be made.
Previously, only claims where damage was assessed at under $15,000 could be cash settled. Those who "opted out" of a managed repair had to prove repairs were being undertaken to receive payment.
EQC has repaired more than 50,000 homes and set a December target to repair the remaining 26,355.
Kettle said where applicable, funds would be paid to the mortgage lender unless the claim amount was below a threshold agreed with each bank.
About seven in 10 homes EQC is repairing are mortgaged.
Kettle said failure to complete the repairs could affect the future insurability on the property.
Customers were urged to have their repairs completed promptly to "avoid inflationary impacts".
EQC critic and homeowner advocate Bryan Staples said the change was a "great thing and should have been done from the start", but came with risks.
"The worst thing for people is EQC has under-assessed the damage and what's going to happen is they're going to go out and say to a builder, ‘Come and fix my house, I've got this much money to spend', and the builder is going say, ‘Well, you haven't got enough money'."
He was not concerned homeowners might keep the payout instead of carrying out repairs.
"My concern is people won't know [if] there is further damage . . . that they are still entitled to have their damage addressed by EQC and [be] paid for that damage," Staples said.
"What a lot of people will believe is when they get that cheque, that's it, they're on their own."
Insurance advocate and Christchurch City councillor Ali Jones said the new policy suited those with the energy to manage a large repair but would also attract the "tired, stressed and financially strapped".
"A holiday in Fiji is very appealing, if someone offers you $80,000 and you think you can repair it for $65,000, you'd take it, wouldn't you?"
She urged people considering the offer to seek advice.
Kettle said the repair programme "hasn't suited everyone" and it was possible now to make upfront cash settlements without jeopardising the programme's benefits.
"We believe people are motivated to maintain the value of their properties and will not want to jeopardise their largest investment by not repairing," she said.
Customers would pay the difference if the completed work cost more than the EQC-assessed value of work. An additional payment may be made if extra cost was for quake-related damage, she said.