People who get Earthquake Commission payouts to fix flood damage can spend the money on something else - but this threatens their future cover, EQC national operations manager Barry Searle says.
Tasman District Council recovery manager Adrian Humphries told the Nelson Mail that EQC was looking at bringing "six or seven" fraud prosecutions in the Nelson region against people who had misused payouts of up to $100,000.
He said an EQC official had told him that it would be acting against people who had received previous payouts, "sold the property and moved and done nothing about it".
But Mr Searle said yesterday this was not the case, and remarks about fraud investigations in Canterbury might have been taken to refer to the Nelson region.
By last week EQC had paid out $15.8 million to victims of last December's destructive storm, which caused at least 1600 slips, including 800 within the Nelson City Council's boundaries. It has settled 588 claims, rejected 360 and has 39 still open.
Mr Searle said there was no obligation on the property owner to complete repairs using insurance payments from EQC.
"Failure to do so, however, may result in the property no longer being insured by EQC, or EQC providing limited cover to the land and dwelling, particularly if the failure to make repairs renders it vulnerable in the future."
Some Nelson residents have complained that EQC has not paid out a sufficient sum to activate their private insurance, and that there is a large cash difference between the payment and what they must find to cover the cost of earthworks and retaining walls.
Mr Searle said the cap of $100,000 plus GST for earthquake damage did not apply to land damage, where the cap related to the value of the land EQC insured.
"Where damage falls outside EQC's cover, property owners will need to look to the terms of their private insurance to see if they provide top-up cover. Obviously, EQC has no control over this."
Storm damage and earthquake cover were quite different, he said, and cover for damage such as that caused in Nelson was limited by EQC's legislation to land damage only, with specific limits.
EQC covered retaining walls necessary for the support or protection of a house or accessway, Mr Searle said. Bridges and culverts within eight metres of the house (or up to 60m if part of the main accessway) were also covered, limited to the indemnity value of the retaining wall, bridge or culvert.
Answering criticism that some residents found EQC difficult to deal with, he said it had made a significant effort to keep affected property owners informed, through direct communications, advertising and public meetings.
"From our point of view, we believe the process has worked reasonably well, but there will always be circumstances where the nature of the claim complicates the resolution. A standout example is where a retaining wall was shared by multiple properties and one owner didn't have insurance."
Mr Humphries, who oversaw the TDC's Golden Bay emergency response, said EQC had worked closely with the council.
"Some people had negative experiences, but I think the vast majority had pretty positive ones. It's very difficult for people - their lives have been turned upside down, and they're looking for somebody to blame or somebody to take some of the pain.
"EQC responded to council input. They take a kicking quite often, but I think in all fairness the service they gave us here was pretty good."
- © Fairfax NZ News