If you are intending talking settlement or going to court, here are a few issues that you might like to consider. All require some judicial debate and each one has a monetary value implication. Sooner or later, all are likely to be considered by the NZ courts. The sooner the better.
1. Good faith – The law is said to require utmost good faith between the parties to an insurance contract, i.e. because within the nature of an insurance agreement, each party needs – and is legally entitled – to rely upon the representations and declarations of the other. On a practical level the doctrine is not easily defined and there is no clear judicial guidance in New Zealand legal precedent as to what is not good faith. What can a policyholder expect of their insurer in relation to their contractual obligations toward them- that has yet to be clarified. For a list of what constitutes ‘bad faith’ please see https://thechristchurchfiasco.wordpress.com/2013/03/10/good-faith-insurance/.
2. Punitive or Exemplary Damages – in insurance law, this category of damages remain unclear in New Zealand, though not in other countries, and requires further judicial debate. In many other countries the insurance industry is punished by the courts for blatant failure to act in good faith toward policyholders. Since the Christchurch earthquakes, there are plenty of examples, even bordering on the criminal to provide the courts with an opportunity to reconsider this issue. Other countries treat a lack of good faith or indeed bad faith very seriously and the penalties against insurers are equally serious. An insurer can expect to pay heavily for underhand dealings with policyholders under the doctrine of exemplary damages.
3. Reasonable Delay – how long is ‘long enough’ in the settlement of an insurance claim post disaster, in New Zealand? This has yet to be decided. Our courts need to decide how ‘reasonable’ two and a half years is. After Hurricane Sandy the New York Insurance Regulation 64 requires that damaged property be inspected within 15 business days of a claim being filed, but for certain Storm Sandy victims, the inspection time was shortened on November 29, 2012 to six business days. In Australia, in a large number of cases insurers could not meet the 10-business day timeframe and delays occurred. The Natural Disaster Insurance Review reported that insurers took, on average, 28 days to accept claims related to the flood in Brisbane, four times more than the average time taken to accept claims which resulted from Cyclone Yasi. (Most Christchurch claimants would have been thrilled….). One insurer which, on average, determines ‘business as usual claims’ in five business days, told the Commission that the average time it took to determine claims arising from the 2010/2011 floods was 35 business days. (Claims resulting from Cyclone Yasi were determined on average in 14 business days). Our courts need to take a realistic view of this. If the Australians can do it, why can’t we??
4. Payment of interest on monies as a result of delayed settlement. The courts have the power under the Judicature Act to award interest (currently 5%) on monies which were withheld from you by deliberate delay, or even delay due to incompetence by an insurer. It will be interesting to see over what period the Courts will consider interest due after two and a half years of inaction. In this case www.stuff.co.nz/the-press/news/8341875/Clarendon-Tower-owner-wins-case the High Court has ordered the insurer of Christchurch’s Clarendon Tower to pay the building owner the $30 million it was worth before rebuild work begins. ‘Compensation’ for delayed payment is better than ‘interest’ which is taxable. There are people in Canterbury already using this case to their benefit.
5. Quantum of Damages awarded as a result of breach of contract in any respect. ‘Damages’ is the financial remedy applied by the Courts for breach of contract and the quantum they will award varies in relation to the extent of the breach. One could anticipate that there will be some very substantial awards in Christchurch as more cases come to be heard and the Courts get a feel for what has been going on…
6. EQC Payments. Insurers have had the habit of uplifting any EQC ‘above the cap’ payments to policyholders (Usually $100,000+) even though the money was never legally theirs and they had no plans or intention to start work on the policyholder’s property at that time. (They tried this on us two years ago!). Often this was done by direct contact by the insurer to the insured’s bank. (Yes, really!) Whether accessing EQC funds from policyholders’ bank accounts without their written authority, (even where there may be a mortgage in place) constitutes theft or fraud under the Crimes Act is a moot point, and the civil courts need to consider whether this is a matter for the criminal courts to examine.
7. Demand Surge – Delayed repairs will ultimately cost more because of the deterioration and additional damage to property as well as changes in the pricing of materials, labour rates and contractors overheads. Overseas experience shows that these surges can be as high as 70%. (See https://thechristchurchfiasco.wordpress.com/2013/03/07/demand-surge-and-the-implications-for-policyholders/). These costs will ultimately have to be factored into the final award.
So – the more cases heard, the better…………there’s a lot to ‘iron out’.
~Future Proofing for a sustainable, participatory, democratic society.
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