More on engineers’ fees
Earlier this week I posted an article explaining the coverage afforded by the additional benefit found in most quality property insurance policies, both home and commercial, for architects, engineers, clerk’s of works etc.
This morning I received this note from one of the LMI team in New Zealand.
I have read your article on professional fees with interest as I had a similar argument with an Insurer following the Kaikoura Earthquake.
The wording of the Professional fees was slightly different in that you needed the Insurer’s permission. As such, we engaged with them but they did not agree and the Insured had to incur the costs and to front up for about $16,000.
It was eventually shown that the Insurer’s assessment was incorrect and the loss increased from $170,000 to about $280,000, just on the one house. The other house is still the subject of further review as the initial offer was $52,000 and the review was $216,000.
The good news is that the Insurers have agreed to consider the Quantity Surveyor costs as Assessment fees rather than Professional fees. This is subject to ongoing discussions between the Insurers and the Insured as to how much is to be paid.Source: Paul North, National Claims Executive: LMI Group NZ Limited
In the main, we find that the claims managers and officers in New Zealand are well trained and fair to deal with and I am pleased that at least one of the claims has been settled fairly.
This type of issue is what we deal with day in and day out. As I said in my earlier post, I have not seen an accurate scope of works first time around for over 5 years. I do not know whether this is a conspiracy to short change people, a lack of training, or people being pushed on fees so much they are rushing the work.
As an aside, if in doubt, my view is usually a mistake over conspiracy and today of all days there is a bit too much unbelievable conspiracy theory being talked about. For those reading this in year’s to come, today it was revealed that a political party head in Australia believes that the Port Arthur massacre was a government plot.
Back on topic, I am of the firm belief that clauses requiring the insurer to grant permission ought to be outlawed. In any contract, especially insurance based on utmost good faith, should have contract certainty.
I can tell you from dealing with hundreds of such decisions not to grant permission leaves the insured very upset with any trust they may have had in their insurer destroyed.
We have to remember that for home owners their home is a huge investment and emotional safe haven. We cannot leave them thinking that their investment is being devalued, made unsafe or their families health are being put at risk by mould or the like.
The contrast in Australia with some insurers is that even when the cover is granted under the policy the adjuster or insurer refuses to grant indemnity. I will provide an example that has my blood boiling in tomorrow’s blog.
I think this issue is more important than ever for I cannot recall a time in my life where I have seen as much shonky building work. My father was a bricklayer and so I have been around building sites since I could walk and the pride that I saw in the faces of the team at the end of the week looking at what they had achieved left a strong impression on me. Now with so many it seems the test at the end of the week is how much money have I ripped off. Even at the conference I attended this week, I had two insurance brokers speak to me about the appalling work done by trades on their property. One a new build and the other a major renovation.
If we genuinely want to provide customer service and reduce claims leakage we have to go back to basics and ensure that the work being done on insureds’ property is done correctly, done at a fair price and that all the work quoted is in fact done.
I would make the suggest that there is more claims leakage caused by contractors to the insurance industry than by Insureds.