BREAKING NEWS
Man shot by police in Rotorua 2 weeks ago has died in hospital ... read more ... Read more
Close

Homeowners lose as insurers get tough

LIZ MCDONALD
Last updated 05:00 16/07/2012

Relevant offers

Christchurch earthquake

GeoNet turns 15 - what have we learned about earthquakes in that time? Evan Smith can't find the words to thank son for life-saving liver gift Rapaki residents hope concrete wall will protect against falling rocks Expert stonemason works on historic Peel Forest church Skinning, 'crazy people' and underwear racing at Queenstown Winter Festival Christchurch educator Jacqueline Duncan receives special honour Gerry Brownlee says change to Otakaro's purpose no big deal, calls Labour 'deluded' Flooding at Christchurch earthquake memorial site expected, Crown says Tonnes of liquefaction silt removed from rotting, quake-damaged house $8,455,690 rebuild claim as Christchurch homeowners sue IAG

Canterbury homeowners say a tough new stance by insurance companies could cost them tens of thousands of dollars, and one says it is costing him his health.

The region's two biggest insurers, IAG and Vero, say they will not pay to rebuild homes sold since the earthquakes, capping settlements at a lower indemnity value.

They are also refusing to pay out for accommodation during repairs.

Together, the insurers have two-thirds of the market.

IAG owns the State, NZI, AMI and Lantern brands.

Lee, who did not want his surname used for fear of making things worse with his insurer, said he could not afford to replace his badly damaged Parklands house without a rebuild payout.

He had been in the process of buying the brick home when the February 22, 2011, quake hit and was unable to get out of the purchase.

The house seemed undamaged, but State Insurance, the estate agent and his lawyer assured him he would be covered for any repairs.

The house has since subsided and is seriously damaged.

An engineer found it would cost more than the $100,000 cap to repair, Lee said, but State would not confirm whether it was repairable until the technical category 3 land has been assessed.

He believed the minimum he would lose was $90,000.

"I would just have to walk away,'' he said.

"I am 40 years old and I would just have to start again. 

"We saved so hard for the deposit, and we have a big mortgage.

"We can't sell it. No-one would touch it with a barge pole now."

Lee now has health problems linked to stress.

"Had they [State] made me aware of this at the time, I would've pulled out of the house purchase, losing [$20,000] and making myself homeless in the process, but [that is] better than where I am now," he said.

It is understood that IAG and Vero recently took legal advice and revised which rights to transfer to new owners.

They had previously said all insurance rights would be assigned to buyers.

The reinterpretation has also caught out lawyers and real estate agents.

Wayne Bishop pulled out of buying a Burwood house when he realised he could be left short by the new rules.

Bishop, whose Bexley home was red-zoned, had wanted the property as an investment he could live in later.

Finding damaged foundations and no up-to-date scope of works, he questioned IAG at his lawyer's insistence and learnt it would not cover a rebuild, even in case of fire.

He cancelled the sale, despite having paid for a property inspection and legal fees.

"It was a $400,000 house. It's a lot of money and we didn't dare risk it,'' he said.

Ad Feedback

''We could have been left with no house, and because it was TC3 land, you could end up with a section of no use to anybody.

"I just couldn't do it, but I felt sorry for the owner or anybody in that situation. They are just trapped."

- The Press

Comments

Special offers

Featured Promotions

Sponsored Content