Land-damage reports to kick off process
The Earthquake Commission will start sending land-damage reports to claimants this week – another ingredient in the already complicated mix of zonings, building claims, apportionment and insurance. Michael Wright asks the commission's Canterbury events manager, Reid Stiven, where they will fit in.
Be honest. Have you thought about your Earthquake Commission land claim?
With lightning-rod issues like apportionment, red zone versus green zone and insurance settlements, land compensation has received little attention – the poor cousin that lets its bigger, bolshier relatives jostle for the limelight.
That is about to change. The commission will send reports to 10,000 of the nearly 50,000 customers with land-damage claims and follow up with the rest during the next month.
The report will not have any cost or repair information and does not include claims from the December 23 aftershocks.
If you have a claim, you will get an aerial picture of your property, annotated by an assessor where damage is thought to be, and pictures taken during your EQC assessment.
If the report does not match your claim, or you think pre-December damage has been missed, that is the time to make it known.
Once the extent of the damage is decided, the next step is establishing the best repair method and how much it will cost.
There are some caveats on how much, if any, compensation you are entitled to.
First is eligibility.
The EQC will pay to repair damaged land within eight metres of an insured residential building. If there is a sinkhole at the bottom of your backyard and no building anywhere near it, chances are it is not covered.
"Unfortunately, it's not a level playing field when it comes to what damage happened on what particular section of land," EQC Canterbury events manager Reid Stiven says.
"The only exception to this distance is land within 60m of a building that provides the main accessway or is land supporting that accessway."
Second is retaining walls.
Walls and their support systems come under the 60m exception when they are supporting or protecting a building. However, depreciation is applied when calculating their value.
"It puts you back in the position you were before the natural disaster," Stiven says.
"If you had a 30-year-old retaining wall, it will compensate you for that. It doesn't give you what you may now require. [It's] a flat-line depreciation, though. We don't ever depreciate it to zero."
Third is the formula for calculating uneconomic repairs.
This is a big one. If the cost to repair your land outweighs its value, you will be paid the lesser amount.
These factors are confined to the damaged area, so if five square metres of your 500 square-metre section is damaged, the "value" in question is how much your 5sqm is worth.
Some instances of this will be easier to accept than others.
If part of a cliffside property has fallen away in the quakes, no-one is going to expect the EQC to wear the cost of building it back up.
Equally, if part of a section has sustained lateral spread, repair may be feasible but judged impossible because it comes out just on the wrong side of a cost-benefit analysis.
These homeowners could argue they are effectively being punished because the extent of their damage was greater than someone else's.
"There will be some properties, perhaps along streams and waterways, where that may have occurred," Stiven says.
"We're constrained by the [EQC] act. That settlement criteria is set in stone. We don't have the discretion an underwriter might have around policy decision."
The commission is working on repair methods. When these are finished, it will decide if it can simply apply the models or if it needs to make further site assessments to calculate cost.
Settlement will see the commission reinstate the land or, in most cases, give cash payouts for residents to do the work themselves or hire a contractor.
Somewhere along that line, some claimants will have to be told that EQC repairs cannot prevent liquefaction and lateral spread on their land in future quakes.
Unlike quake-damaged buildings, which are repaired or rebuilt with future events in mind, land repair is "reactive, not proactive", Stiven says.
"We react to an event. We don't future-proof.
"If you were in a [technical category] 3-type risk, you're still going to be after the land settlement. You're always going to have that risk."
There are some positives. Apportionment does not apply to land claims.
Aerial investigation after each major quake covers all areas and LiDAR (light detection and ranging) testing determines exactly what damage happens when. Private insurers have no responsibility for land damage, but the settlement process will coincide with building repairs in some cases.
"Somewhere down this track will be some engagement with the insurers," Stiven says. "We've had very loose-level talks with them where we've acknowledged that there will be times when we have to work together for the best interests of our mutual customer," he says.
Cost assessment is scheduled to start by September.