"Highlighting the inadequacies of the way in which the earthquakes of 2010-2012 were handled by the insurance industry! "

My Insurance Nightmare with State Insurance ….


Since I published The Christchurch Fiasco: the Insurance Aftershock and its Implications for New Zealand and Beyond, many people have asked me about my personal insurance story, as this is not covered in the book. So in response, I am pleased to provide a brief break down of the facts:

My insurer is State Insurance, which is an Insurance Australia Group (IAG) subsidiary. My home was seriously damaged in the September 4, 2010 earthquake, so badly damaged that Civil Defence considered the house uninhabitable. We have not lived there since that earthquake and instead have been ‘camping’ with family and friends at cost. That was almost five years ago. In that Bannertime we have had the following experiences with State Insurance:

  • Delay of our claim by repeated use of external parties such as loss adjustors, lawyers, structural engineers and quantity surveyors and the many insubstantial reports/visits associated with each of these groups;
  • We have had over 31 separate visits to the property involving more than 70 people- and those are State personnel;
  • Statements that the house was to be a ‘repair job’ even prior to the release of any engineering reports and contrary to EQC assessment that the house is a rebuild;
  • Repeated denial of the extent and cost of the damage to the property;
  • Low-balling the claim settlement, time and time again. In the past four years State’s ‘assessment of repair cost’ has been repeatedly reassessed. In fact we have had six offers from State Insurance ranging from $198,000 to over $900,000 – an $800,000 increase!!!
  • Attempts to extract the payout of the Earthquake Natural Disaster Fund from our bank account without our prior consent. Our Bank phoned us to inform us that State Insurance had requested (in writing) the funds be transferred to them, and “did we know?”.  This occurred before any agreement of the route to be taken, actual work  being carried out or any offer of settlement.  They just wanted the money!;
  • State initially refused to meet with us despite repeated requests. It took four months before we finally made face-to-face contact and only because we employed the services of a law firm to secure a face-to-face meeting. State claim that their’s is a telephone claims service only;
  • State denied the fact that the property was uninhabitable despite its yellow sticker status (i.e. limited access and needing further evaluation). There is clear evidence of structural damage to foundations, chimneys, walls and roof;
  • State denied our accommodation needs for 18 months;
  • A 500 litre header tank came loose from its moorings during the earthquake and its entire contents spilled through the upstairs ceilings and rooms (bringing down ceilings) and onto the ground floor below soaking the entire area. State have denied our content claim as a result of the mould and water damage (also coming up through the concrete foundations) using ‘hidden gradual damage’ as their reasoning;
  • Repeated repair assessments carried out using the MBIE Guidelines and not our insurance policy standard despite it being clear that the policy standard is the standard to be adhered to;
  • Insistence upon the signing of a Project Management Agreement (PMA) between State’s preferred contractor (Hawkins Construction) and ourselves, which tried to limit  liability and which was in conflict with our legal rights under the insurance policy and ultimately our financial status – again lawyers were involved. Eventually (months later) State Insurance conceded that the terms were onerous and changed the PMA for all IAG Insurance policyholders;
  • Using the Court process as another way of delaying the claim e.g. delayed expert reporting;
  • Forcing us to incur additional expenses as we have had to employee the services of good quality, independent, engineering firms and quantity surveyors as well as a lawyer. This has highlighted huge discrepancies between the insurer’s ‘version’ and the true state of the property. Such a  need to ‘protect’ ourselves from our insurer flies in the face of ‘good faith’ dealings and the fiduciary obligations of an insurer;
  • Insistence that the NZD 20,000 Earthquake Commission Contents cap actually be spent on replacing items prior to State Insurance’s agreement to finally settle the initial contents claim. In addition, the use of “depreciation” to diminish the claim;
  • Insistence upon all communications between our legal representative and State Insurance having to go through State’s lawyers, – which naturally increased the costs for us and has delayed the settlement process even further;
  • Using ‘betterment’, ‘faulty design’ and ‘pre existing damage’ in an attempt to diminish the claim;
  • On two occasions we have been told that if we accept a particular offer ‘work can begin tomorrow’;
  • Unpleasant customer service.  In the early phase of the claim we were told by one of the claims managers “who did we think we were” and that we should be careful otherwise “we might find ourselves at the bottom of the list”. This was stated during a meeting with our legal representative present;
  • State’s (then) Chief Executive (now one of the EQC Commissioners) also stated that “you’ll have what we give you”;
  • Request to tape record meetings with State was denied;
  • Huge difficulty accessing our insurance file, despite the fact that we are legally entitled to it. Eventually we had to make a formal complaint and request through the Privacy Commissioner. The Commissioner conceded that some of the information State Insurance was withholding should have been released;
  • State’s ‘independent’ engineers assessing the property using the various iterations of the MBIE Guidelines despite being aware of the policy standard, resulting in the repair scope being continually diminished and still not to the policy standard.

It is for this reason that I believe New Zealand needs to find another way to protect its citizens and their property post natural disaster. In a capitalist society where profits are king this level of performance may be acceptable but in pursuit of a fair functioning democratic society this behaviour is unacceptable. A permanent government catastrophe insurance programme which is able to provide an adequate lower – cost public substitute for a notably larger, national client base will crowd out and eventually legislate out the private market alternative.

I have waited long enough – the only solution now, is the law…

~Future Proofing for a sustainable, participatory, democratic society.

If you would like to contribute a post on this topic then see Guest Archives.

Author: Sarah-Alice Miles

Love to write, create and watch the clouds move across the sky - these days in the Netherlands. 'Art allows us to find ourselves and lose ourselves at the same time'.

13 thoughts on “My Insurance Nightmare with State Insurance ….

  1. Pingback: Christchurch four years on « The Standard

  2. Sarah you have our sympathy – and admiration for the way you’ve used your experience to support other disaster victims and raise awareness of the tactics used by Insurance Australia Group (IAG) and others. We also have a home insurance nightmare, and fear many other Australians may have similar stories to ours. We had been insured with NRMA (part of IAG) for 14 years prior to November 2011, when we made a claim for water damage to our home in East Malvern, Australia. IAG rejected our claim, before allowing it on our written appeal; hired contractors to gut and rebuild our house, but botched the drying and remediation. More than a year on, IAG got expert advice that the house needed to be gutted a second time, at which point they again denied all liability. Our lawyer has described it as a “classic case of an insurer refusing to honour their policy”.

    Maurice Blackburn Lawyers are acting on our behalf and taking Insurance Australia to the Supreme Court of Victoria.

    We are paying rent and a mortgage until our case is resolved, as our house is unsafe to inhabit due to very high levels of airborne toxic mould. Based on our experience with IAG/NRMA, we wonder how many Australian families may be living in contaminated homes.


    • Wonderful to hear from you Bron, I wondered how long it would take for the Australian affected policy holders to make contact – I know there are thousands of you too. It certainly does sound as though you are having your own nightmare and I wish you much strength throughout that process. Did your insurer have a ‘preferred contractor’ and we’re you encouraged to sign up with them? I think its critical that policyholders start working together and exposing the dishonesty that surrounds the insurance industry. Is there a movement or a forum in Australia where people can share their concerns and frustrations. I thank you for bringing the mould issue to our attention and if you have any more information in relation to that issue I would be happy to publish it. Do stay in touch and I look forward to hearing from more Australians- afterall its the same dishonest corporates we’re dealing with.


      • Thanks Sarah – it would be fantastic to have your support raising awareness of the health risks of mould contamination, and need for proper mould testing and remediation in cases of water damage. From what we have seen and experienced, there is a lack of knowledge, skill and rigor amongst many of those working in the insurance and building sectors, and this may be placing policy-holders in danger. We’ll pull some material together and stay in touch. We’re not aware of a consumer forum of the kind you mention in Australia, and agree there is a need for it. We know of other cases just from our personal networks, and through general consumer blogs like


      • Bron, Perhaps you’d like to write a guest blog on the issue of mould. Resources can be linked within the article.


  3. We are even worse. TC3 is like a death sentence . We do not know of any progress
    at all.


  4. I have been through a similar experience with State. I have been fortunate that I have the constitution to stand up and fight them.
    I really believe that they are misleading and deceptive with regard to my dealings with them. To all Cantab’s do not let the bastards grind you down. Do no take on face value what they tell you.
    Shame on IAG
    Good luck!!


  5. We have had a very similar situation with Southern Response. We also were investigatated by our insurance co, as we had taken out a 6 month rental as per their instruction and didn’t move into it because they delayed the repair. We were open and honest about this and I found it a real invasion of our privacy to have our bins gone through and my husband door stepped while he was looking after 4 children. I’m currently taking them to court to get our accomodation allowance paid. After 4 missed dates for repairs we are still waiting in a house that’s foundations have failed. We have been labeled diffiucult customers, that’s what happens when you push for a fair settlement. I can’t believe this is happening in a democratic country. I also wish the rest of New Zealand knew what waits them should they ever have the misfortune of losing their home. We will keep fighting for a fair and just settlement. Like you we will not give up !


  6. Holy shit this is awful.. I can’t believe this.
    All the best x


  7. Your sad sad story is similar to many I keep hearing. It is so depressing, the future of Chch and its residents is in the hands of these Insurance Companies. I believe that they are acting with criminal intent, in a negligent manner with total disregard for Chch and most importantly the human beings they are treating with total contempt. I have just been paid out on the rental I owned, I am sure they realised that after 2 years of maltreatment they had gone too far and had made too many mistakes and had we gone to court they would have looked stupid and would have lost. I was made to sign docs to satisfy the reinsurers which they then said were meaningless. It is with relief that I have settled, but I know with sadness I now must move onto my own home and another battle. I am tired and worn down……but will never be beaten by them.


  8. I agree totally with you Sarah.

    The transparency surrounding this has been appalling in the extreme. I am starting to wonder if a class action – is that possible – of disgruntled claimants against the insurance companies is necessary. One that goes all the way to the Supreme Court of New Zealand.

    Of your own circumstances, I wish you all the best getting them sorted. You might know people in worse situations, but it sounds like your own circumstances are bad enough.




  9. Hi Sarah, Having read some of the articles you have written I am left wondering what hope there is for any of us dealing with major house damage (as we are) and our insurer. It seems to me that the insurer (Tower in our case) has all the power and the policy holder essentially none. Our experience is that we are at complete mercy of the insurer. We also have had to get independent engineering and QS reports all of which differ from Towers stance. Our home became uninhabitable on 22.2.11 it is still Red Stickered due to structural damage. We are just waiting for them to put all the information they have collected together and present us with their position. They have continually emphasised that we are a repair – when pressed for a methodology for a repair on a very difficult hill site, they have costed a best case scenario repair, which essentially demolishes almost all of the house and rebuilds it. We know the costings are unrealistic as is the task of repairing it too. But they are within their rights to do this to people. My constant question which I have also put to the Insurance Ombudsman is What is a REASONABLE time frame to sort people out? So far no one has given me a firm answer it is all very vague. This annoys me greatly especially the answer from the Insurance ombudsman which essentially stated that because the event/s were unprecedented timeframes are undefineable. Not good enough. It is blatantly obvious our house is a complete rebuild but Tower are purposely delaying for their own advantage. I know they are waiting to wear people out and settle for less than they are entitled to. Insurers are truly the scum of the earth. But we will wait. I would rather not be settled right now so they wear the costs of continuing inflation and not us. Kind regards Sarah

    On 2/02/13 9:59 AM, “thechristchurchfiasco” wrote:

    > thechristchurchfiasco posted: “Since I published The Christchurch Fiasco: the > Insurance Aftershock and its Implications for New Zealand and Beyond, many > people have asked me about my personal insurance story, as this is not covered > in the book. So in response, I am pleased to provide a” >


  10. Insurance companies should be treated as the criminals they are. Lock them up and throw away the key as they are thieves. Why ask to record the meeting just record it without permission and treat them in the same manner as they treat you as they do what they wish.


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