Body corporate unit claims 'a nightmare'
Insurance claims on units run by a body corporate are proving to be a "real nightmare" for owners.
Speaking at a seminar on insurance issues, lawyer Stephanie Grieve said bodies corporate were finding it difficult to buy insurance cover and that put them in breach of legislation governing them.
Bodies corporate should be aware that decisions they made in repairing their buildings could have to pass court scrutiny in the end if members did not agree.
Any member of a body corporate could apply to the High Court for a scheme of arrangement setting out what the repair plan was and any member could also object.
Unless there was unanimity the repair could end up in court so bodies corporate should be mindful of that when making decisions.
Grieve said the law firm that she worked for was coming across a lot of under-insurance among owners of commercial buildings and difficulty with insurers over multiple claims.
If a commercial building was damaged after September 4 but not repaired, but the repair was quantified and the policy was renewed before February 22 when the building became a total loss, there were strong arguments for two claims, she said.
But if the policy was not renewed between the two earthquakes there was a question over at what point did the policy reinstate for the next event. That was down to the policy wording.
One insurer had been accepting multiple claims, but had put a hold on that and she suspected these cases would end up in court.
Grieve said she was aware of a red zone case where the claimant started court proceedings and the insurer then agreed to settle on a full replacement payment for the home rather than a lesser payment for "repair".
Insurers have been arguing that they are only obliged to pay for repairs to a red zone home, although repairs are hypothetical because homes in the red zone must be abandoned and homeowners have two compensation choices.
Grieve said there were arguments that those homeowners were entitled to full replacement because they faced a total loss of the home and could not live there and that depended on the policy.