Insurers, owners join battle over standards
Insurance companies and building owners are joining forces in legal action against Christchurch's stricter building standards.
The Insurance Council said yesterday that it would seek to overturn the Christchurch City Council's 2010 policy on earthquake-prone buildings, which lifted the minimum seismic strength from 33 per cent of the new building standard to a target of 67 per cent, through judicial review.
It said the policy:
❏ Was slowing the city's rebuild.
❏ Could see building owners burdened with unexpected costs.
❏ Had ramifications for other cities, especially Auckland and Wellington.
Insurance Council insurance manager John Lucas said the policy was delaying building consent approvals in Christchurch, and the added liability could see insurance premiums "skyrocketing", especially in the main centres.
Building owners were among the parties being sought to join the challenge, to be heard in the High Court in Christchurch on December 12.
Court documents submitted by solicitors Jones Fee described the council's decision to change its policy, which was reviewed after several building collapses in the September 2010 quake, as "unlawful and invalid".
Lucas said insurers were "very sensitive" to efforts to improve the city's safety.
Buildings above the 33 per cent standard were, under the Building Act, not quake-prone and/or a threat to life safety, he said.
The council's revised policy was adopted on September 10, 2010, six days after the first quake.
Changes to building standards would usually include up to 12 months of industry and public consultation, Lucas said.
"People just can't adapt to that straight away and insurers were already liable for repairing lots of damaged buildings. They thought their liability was to the 34 per cent," he said.
"There are lots of buildings in Christchurch now that are below 67 [per cent], which if the Christchurch City Council is correct, are going to have to upgrade the whole building. That's a significant cost."
Insurers were being asked to "future-proof" buildings beyond their contracted responsibility, Lucas said.
"Quite simply, the insurers can't do that. We only repair what is damaged," he said.
"If the damaged part required upgrading to the current code, that's fine, but what the Christchurch City Council are implying is that the insurance company, and the building owner too, would probably end up paying for bringing the whole building up to code, which is a greater cost far beyond what had been damaged."
Owners would be affected, especially those who were under-insured.
"There'll be enough to repair the building, but not to go beyond what the insurers would repair. To go up to 67 per cent could cause some building owners a lot of financial stress," Lucas said.
Council legal services manager Chris Gilbert said the council was required to review the policy every five years and began work before the September 2010 quake.
Consultation was carried out between March and August 2010, before being adopted at an extraordinary meeting on September 10.
The policy set a target for structural strengthening of 67 per cent of the code.