Joint Statement on What Constitutes a Repair Under the Earthquake Commission Policy – now released
I read with the interest the joint statement between the Earthquake Commission and the EQC Action Group with the main item, which has hopefully now been resolved, is what constitutes reinstatement.
The agreement confirms that reinstatement is to a condition ‘as new’ and not the pre-earthquake condition of the property.
This issue, which I thought had been resolved with the introduction of the reinstatement or replacement memorandum over 40 years ago has been tested even here in Australia of late with many Insurers arguing that some depreciation allowance should be made for the age and condition of the damaged property. A common example is offering 50% on a rusted roof that has been damaged by a hail storm.
Australian policies in particular are quite clear in that they cover to a condition as new with no allowance for its prior age or condition.
I call this attempt to adjust a claim in this way ‘underwriting after the event’.
If the policy is sold on a new for old or reinstatement or replacement basis in insurance then the claim ought to be settled in the court within the terms of the policy which in turn has been priced on this basis and the client having paid the premium.
I’m pleased to see this agreement has been reached without the need to go to court, and I applaud both parties for resolving the matter as they did.