Patience needed to change an insurer's view
Do you have a legal question arising from how the earthquakes have affected you? Lane Neave partner Dr DUNCAN WEBB is our "agony uncle" on how the law applies to certain situations.
Q: Our house is on TC3 land. The insurer said it was going to use a pump/resin system to re-level it, but not to lift it up to where it was before relative to the surrounding land. We got an engineer to provide an independent opinion and his report said that the foundation should be rebuilt. The insurer does not accept this and we are in a standoff.
A: There are a number of technical and legal issues that arise in your case - such as whether the repair method is adequate and also whether the subsidence of the house is damage to the land or to the building. However, you appear to be well aware of these matters and the real issue is how you can resolve the dispute with your insurer.
It is important for homeowners not to leap to the conclusion that they are actually in dispute with their insurer. In most cases insurers will take into account any new information and opinions - although they may not always change their mind.
Here it appears that you have provided the new information from your own engineer, but the insurer prefers its own engineer's view. If this is unacceptable to you (and given your engineer's advice it may be) then you are in dispute.
There are a number of ways to seek to resolve a dispute. One is by using the insurer's own internal complaints process (which all insurers are obliged to have). However, that is unlikely to be useful for a significant difference of opinion on repair method. In general the internal process is best suited to dealing with failings in the insurer's system and obvious errors.
Here the procedure appears to have been effective, it is the substantive outcome based on the engineer's opinion which is problematic.
You should also not discount plugging away with the insurer. While it is frustrating that it often takes a very long time to persuade an insurer to change its view, it does happen and sometimes simply presenting an opposing engineer's report is not enough.
It may require a fairly lengthy (and possibly expensive) dialogue between engineers or other professionals. Such an approach can bear fruit - and it has been so long since the earthquakes that it is now getting to the point where insurers are under increasing pressure to settle claims promptly.
Mention should also be made of the Insurance Ombudsman.
This is a service which is funded by the insurance industry, but is run independently. It can deal with complaints for amounts of less than $200,000. However the office is best equipped to deal with matters about policy coverage or procedural errors rather than matters about expert opinion on repair method.
It has a helpful website (iombudsman.org.nz). It is also free for homeowners to use - and the decision is not binding on homeowners so it is often worth considering for certain disputes where a deadlock has been reached.
If the dispute is fundamental and there is no sign of movement from the insurer then court proceedings may be necessary. Most lawyers will agree that this is always a last resort.
In general the delay, inconvenience and expense involved in resolving a dispute is far less if court can be avoided. However there are real benefits to taking the matter to court - the main one being that the judge can insist that the insurer take steps and do so within a clear time frame.
Ultimately, the benefit of the court system is that it compels the parties to present their case, and imposes a decision.
The significant disadvantages of the court are that it is very expensive and time consuming. Many cases are ultimately settled before a full trial either by ongoing negotiations or in mediation. The filing of proceedings is a clear (but costly) indication to the insurer that you are not going to accept its decision. However the risks (such as the expense, and the fact that you may lose) need to be balanced against the benefits.
Ultimately, where parties are in a real and intractable dispute, it is impossible for them to resolve it by agreement and adjudication is essential.
The risk of an adverse decision frequently focuses the mind of both insurer and homeowner and a settlement is reached. Only in rare cases does a full trial occur. When a court ultimately decides a case it provides useful guidance about earthquake insurance issues and of course resolves the dispute - one way or another.
Duncan Webb is a partner at Lane Neave lawyers. Email questions for him to email@example.com.