In these PowerPoint slides Dr Duncan Webb covers the three elements of the claims settlement process. This is a great, high level overview, of managed repairs, cash settlements. Duncan also touches on full and final (discharge of claim).

1. ELEMENTS OF CLAIM
SETTLEMENTS
Duncan Webb

2. How is the claim settled?
• When you reinstate the insurer will pay
• The insurer will manage the reinstatement
• The insurer will pay the cash equivalent of the
cost to reinstate
• Usually the insurer’s choice
• No policy requires a final settlement
• Insurers may require a clear settlement agreement
which is consistent with the policy

3. When you reinstate we will
pay…
• Most common settlement clause
• No right to cash settlement (other than indemnity
value)
• Needs insurer’s consent to incur costs
• Query who is in control of reinstatement project
• Insurer will often seek to dictate reinstatement
method / professionals / contractors

4. The Repair Contract
• Whose Contract?
• Insurer - builder / homeowner – builder / homeowner – insurer –
builder.
• Check the Policy
• If there are additional works then you may need to be a party.
• Contract terms are negotiable. Look out for:
• Variations
• Completion dates
• Penalties
• Unforeseen conditions
• Insurer can be liable for increases in cost (where no final cash
settlement).
• Get the contract reviewed.

5. Some Legal Niceties
• Insured has obligation to prove loss / damage
• Insurer cannot equivocate forever
• Reinstatement may require disproportionate
repair
• Damage is any adverse change (amenity /
aesthetic / structure / durability)
• No policy allows payment of the “best estimate”
of the cost of reinstatement.
• Windfalls possible

6. Cash- can my insurer insist?
• In some policies the insurer
has a right to pay the cash
equivalent of repair or rebuild
but:
• Did the insurer make an election
to repair themselves?
• Has the insurer represented that
they would manage?
• Good faith…
• Rebuff threats in respect of repair
/ rebuild contract timelines.

7. Full and Final?
• Insurer cannot insist that
your settlement is “full
and final”
• Beware of full and final
agreements if you are
going to repair.
• May be advantages to full
and final agreements
where you intend an
outside of policy solution

8. When should I agree to a full
and final settlement?
• When risks are low
• When you are wanting to depart
from policy
• Different house
• Waiting before undertaking
repair
• Buying two properties
• Note the terms of the settlement
agreement
• “intend to…”
• Repair / rebuild / reinstate /
replace?
• In general must spend on
reinstatement.

9. Can I ask for more cash
later…?
• Not if the agreement was
full and final:
• Limited exceptions
(such as fraud)
• Partial settlements are
possible. Insurers may
agree to pay more for:
• Variations
• Increased foundation
costs

10. LAND…
Duncan Webb

11. Land Damage
• the land on underneath the building; and
• all land within 8 metres of the building;
and
• the land holding—
• within 60 metres, in a horizontal line,
of the building; and
• Which is the main access way; and
• all bridges and culverts situated within
the land; and
• all retaining walls and their support
systems within 60 metres, in a
horizontal line, of the building which are
necessary for the support or protection
of the building or of the land.
• Must form part of the “land holding”
(not just legal title).

12. Damage
• Adverse change affecting usability.
• EQC categories:
• Flat land: Land cracking (spread and shaking);
undulation; ponding; settlement based drainage
issues; groundwater springs; ejecta; increased
vulnerability (flooding and liquifaction);
• Hill: mass land movement; rock fall / cliff collapse;
localised movement (small slips / retaining wall
failure).
• Must be change to the land in question.
• Kraal v Earthquake Commission [2014] NZHC 919, [2014] 3
NZLR 42.

13. The Amount of Land
Insurance
• For land the lesser of:
• (a) the value, at the site of the damage, of an area of
land being:
• the minimum area allowable to be used under the District
Plan for residential land; or
• 4 000 square metres; or
• The land that is actually lost or damaged—
• For retaining walls , bridges & culverts - indemnity value.

14. Land Damage: Fix or Pay?
• Sometimes that will be the cost of repair
• Will never be more than the value of the insured
land at the time of the loss
• May be the “diminution of value” (EQC v ICNZ
[2014] NZHC 3138
• Value of land lost where total loss.
• May be by reference to cost of ancillary works to
house (lifting / foundation enhancement).