Fears for 'green frame' losses
Central Christchurch landlords with sites earmarked for Government rebuild projects fear they will miss out on millions of dollars in insurance and be left unable to replace lost buildings.
Some have banked interim insurance payouts, to be topped up by insurers later when they rebuild. They fear their insurers will decline the extra cash once the land changes hands.
"There is a chance that the insurer is going to say, 'Oh, you don't have a site, so we are not going to pay out'," said David Wallace, the Christchurch representative of investor Devonia Holdings, which has close to $30 million worth of insurance claims for land designated for the green frame.
"How do you know you'll get what you're entitled to? Sometimes one word can make a lot of difference in an insurance policy.
"I think there will be a huge bunfight, but we would rather it was nice and clean."
Devonia owns the cleared sites of the Civic, Clinic, Iconic, AMI and Winnie Bagoes buildings between Manchester St and Latimer Square, and is awaiting more than $20m worth of rebuild settlements on top of indemnity payments already received from insurer Vero.
Wallace said Devonia's owner, Sydney-based investor In Shik Hong, wants to keep his capital in Christchurch. They want an assurance from Vero they can build elsewhere once the land is taken for the green frame.
"We are still waiting. They aren't telling us anything," Wallace said.
A Vero spokesman told The Press claims were being handled on a case-by-case basis.
"We cannot give a general statement on how things stand. We are working through each of the issues with our customers."
The Canterbury Earthquake Recovery Authority (Cera) has indicated the Crown does not want to handle insurance claims and property owners should sort payouts with insurers. However, any sites taken by compulsory acquisition would bring unsettled claims with them.
The Government has set a December deadline for the first batch of purchases.
Claims advocate Katherine Smith Dedrick, of insurance recovery firm Risk Worldwide, said time was important and insurance companies were not moving quickly enough to settle claims before Cera deadlines.
"They have to play ball - they have an insurance contract that owners have been paying premiums on for years and years."
Smith Dedrick said owners needed to be pro-active and remove insurers' hurdles by arranging their own reports.
"They need to be able to quantify their loss, or the cost of rebuilding, if they are to negotiate. And they have got to get in and get it done now."
She was aware of confusion over rebuild insurance among property owners. She said entitlements depended on individual policies, but believed most allowed construction on another site.
One insurance broker said the issue affected several clients negotiating now, but did not want to comment publicly for fear of jeopardising relationships with insurance companies or property owners.
Vero and NZI are the biggest commercial property insurers in central Christchurch.
Investor Antony Gough, whose site at the corner of Armagh St and Oxford Tce will be swallowed by the new convention centre, was optimistic his rebuild insurance would transfer to another site.
"Supposedly the money can be transferred. I know everyone is nervous that their insurance companies won't allow it.
"Insurers will try and wriggle everywhere they can - I think owners need to be bolshie and stand their ground.
"They are paying premiums and it's time for a payout," Gough said.
- Fairfax Media