Insurer should reinstate floor to pre-quake level
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.
Our house has sunk at least 300mm, probably closer to 500mm in total. Now, despite our policy being "as new", the insurer is refusing to reinstate the house to the original elevation of 11.22 metres above the Christchurch datum. This is despite the height being stated on documents submitted to the council for consent. Our insurer is saying that they don't have to reinstate to the original elevation so they won't, instead opting for a "jack and pack". Your advice would be much appreciated.
At the heart of your problem is the fact that most homeowners have separate insurance for their land and their home.
The land is insured by EQC by statute, and the home is insured with their usual insurer (with EQC paying the first $100,000) under the insurance policy.
The insurer may be saying here that the sinking of the house is not damage to the house, but damage to the land. It is possible, for example, that a house and the land around it may sink a significant amount, but the structure itself is largely undamaged - suggesting that the damage (sinking) should be covered by EQC and not the insurer.
The difficulty here is that there is no agreement between EQC and the insurers as to what is land damage (and the responsibility of EQC) and what is damage to the house (and the responsibility of the insurer). For you, the homeowner, this should not matter as between EQC and your insurer the matter should be fully resolved and you should be compensated in full.
This is particularly difficult in cases like yours where the land has been altered in some way (such as by dropping). Arguably this is in fact land damage and therefore the cost of returning the land to its original level should fall on EQC (or EQC should compensate you for the loss caused by the drop). However, the insurer is still required to repair the house.
Many insurers in situations like yours claim that the drop in level is not a matter for them. This would be correct if the drop did not affect the ability to repair.
However, if the property has dropped below the required level for flood protection (which I think is 11.8m above mean high tide) then any substantial repair that requires a building consent will most likely have to show that the risk of flooding is reduced - and the usual (and cheapest) way of doing this is usually by raising the house above the hazard level of 11.8m above the mean high-tide level.
Most insurance policies state that the insurer will bear the cost of complying with any building code requirements or local body regulations.
In this case the requirement for the building to be above 11.8m above the high-tide level is a local body requirement and there is a good argument that in that case, the insurer must pay for any additional cost incurred to rebuild the house at a level that complies with local body requirements and the land insurance issue is irrelevant.
At the very least any repair must leave the house as protected from natural hazards (such as flood) as it was prior to repair.
In my view this means that the repair must put it back at the same level as it was pre-earthquake at the very least.
Duncan Webb is a partner at Lane Neave lawyers. Email questions for him to email@example.com.