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

Cash Settlements: What the Insurer’s Don’t Want You to Know – Guest Post by Adrian Cowie


Much has been written about the pros and cons of accepting Cash Settlements for Earthquake Damage. Almost all of writers have focussed only on whether you would be able to get the scoped repairs actually completed for the settlement amount. That is, will the cash settlement amount be enough to get the scoped repairs completed.

But there is a much larger, and more serious issue at stake, which to date has not been covered.

The issue is this:

What happens if the EQC and/or the Insurance Company carry out an assessment that does not identify all of the earthquake damage? Any cash settlement is then based, not on the actual damage, but only on the damage as they have reported it.

Let’s take an actual recent example.

A Burwood property, two-storey house, built in the 1990’s. Concrete slab, timber framed. EQC issue a cheque of $45,000.00 stating that this is the final cash settlement amount for the earthquake damage.

The client questions the scope and assessment methodology, and EQC, true to form, cannot produce any documentation outlining their calculations; no assessment data; no floor level survey; nor detailed costings.

When the owner engages professionals to assess the property, it is found to be out of level by over 50mm, with over 50% of the ground floor sloping steeper than a grade of 1 in 200. The house has also settled by over 200mm on it’s own footprint, and settled over 350mm in total.

In summary, in order to get the house back to the state required in the insurance policy, it would almost certainly need to be rebuilt. Not being a Valuer or Quantity Surveyor, a guess at the rebuild cost would be around $650,000.00.

A quick calculation shows that the EQC ‘final cash settlement’ is short by over $600,000.00.

It can clearly be seen that the argument of whether the $47,000.00 will cover the scoped repairs is irrelevant. What is more at stake is the incorrect assessment which has allowed EQC and the Insurance Company to immediately save $600,000.00 on this one house.

Is this a deliberate strategy by both EQC and the Insurers? Absolutely.

How many houses have been wrongly assessed by insurance companies? Who knows. But a guess would be easily over 10,000.

Has your house been incorrectly assessed? Well, if you have had a cash settlement based only on the assessments carried out by your insurers, then there is a very high probability you may be missing out on what you are legally entitled to.

This amounts to a ‘Windfall’ for the Insurer. They know it. And they love it.

The key advice is not to immediately accept what the reports prepared by the Insurers ‘Professionals’, but to get your own independent advice and the insurer should be paying for this independent advice!

Written by Adrian Cowie
Registered Professional Surveyor

Author: Sarah-Alice Miles

Love to write and create - these days living in the Netherlands. 'Art allows us to find ourselves and lose ourselves at the same time'.

6 thoughts on “Cash Settlements: What the Insurer’s Don’t Want You to Know – Guest Post by Adrian Cowie

  1. Well written and accurate.
    The overlying issue here of course is the future of 2nd hand housing stock in Christchurch. As alluded to in the article, how many people have cash settled? Of these, how many actually effected any form of repairs with the cash settlement?

    There are major issues with the major PMO’s demanding that the trades people carry out work that is below the current building code. The firms doing this work are the ones who are liable for it under section 399 & 397 of the building act 2004 and the new amendment 4 about to come into force. This legislation is on top of any consumer guarantees that are also required and is for a period of 10 years. Project managers and EQC will get away scott free when these cases go to litigation as they will have plausible deniabilty by simply stating that “We informed all concerned that all work was to be carried out the current building code”.
    I can assure you that the vast majority of people carrying out this work either should know better or have been indoctrinated to think that they are protected.

    I am a builder with over 25 years self employment experience in Chch, and (at a massive financial cost to me) point blank refuse to carry out work for EQR or any of the PMO’s who are known to be operating in this way. I have integrity for my trade and will not be a part of the major damage that is being done to out housing stock.


  2. A good analysis but the issue is how to force EQC or a private insurer to correctly scope damage when they stonewall and the Judiciary is unwilling or incapable of issuing declaratory judgements setting precedents for general use.With over 250 cases before the special quake court and very few settled and no useful precedents set the Judical system has failed, so I believe retrospective legislation is the only answer and much as I hate retrospection it has become more frequently used by government to fix official “mistakes” – the pledge card and more recent validation of swearing in police being two examples so what is good for the state should be equally if not more so for the citizen.To be effective legislation has to be prescriptive to ensure the legal profession and judiciary have no opportunity to re interpret against the interests of the insured. What I have in mind is mandatory damages and interest on miscalculated and delayed claims – damages equal to the erroneous calculation and interest from 6 months after the event at IRD rates and perhaps a new crime of corporate malfeasance.


  3. The Red Cross have grants to help with obtaining professional advice. Check it out to see if you qualify:


  4. Adrian – Well said and so true. It strikes me that if Labour are going to finally set up a national disaster insurance scheme, what we will need is a manual which sets out the exact procedure to evaluate the condition of a house – the same process for everyone. Even the dodgy engineers would have no choice but to do it properly and it might well start with a thorough survey? Anyway – I admire your integrity.


  5. This needed to be exposed and sends a warning to all those who are tempted into a settlement.


  6. Thank you Adrian for being one of the few Professionals willing to stand up against these Government sanctioned ripoffs. Kind Regards: Phil Elmey


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