Weathering the storm and insurance claims

IN Partnership with

Insurance law specialist Kate Sheehan explains how to make a claim for the recent extreme weather events, pitfalls to watch out for and where more advice can be found

THE TWIN disasters of the Auckland Anniversary flood and Cyclone Gabrielle have jolted Kiwis into realising how poorly prepared New Zealand is to face such ferocious weather as regular events. The psychological shock for the insurance industry this summer has been large, perhaps because the planet forgot to send New Zealand the memo that it had already shifted the goalposts for weather extremes in this part of the world. Reducing the risks that most Kiwis didn’t realise they faced until now is a key priority for insurance going forward, but the task at hand is still one of covering the losses incurred. To help people going through the claims process, Insurance Business asked Kate Sheehan, director at insurance law specialist Kate Sheehan Lawyers, about some of the practical aspects of making a claim and what to expect from the process. Insurance Council of New Zealand (ICNZ) provisional claims data for the Auckland weather bomb show that claims will cost private insurers alone over $1bn, while provisional claims from Gabrielle were worth $890m as of the last week in March.

Kate Sheehan Lawyers is a boutique law firm specialising in insurance advice, claims and disputes, construction, property, lease and valuation issues and real estate disputes. Kate Sheehan is a lawyer who works with clients to get results by resolving commercial disputes or representing their interests in court. Sheehan has a law degree from the University of Otago and was admitted to the bar in New Zealand in 2002. Outside of work, she enjoys traversing the beaches of Auckland with her dog Ritchie (named after Richie McCaw).

Find out more

“Once the damage has been assessed, only then will the insurer either pay out the sum insured or reinstate, depending on the policy”

Kate Sheehan, Kate Sheehan Lawyers

These estimates are of course dwarfed by the costs that continue to stem from the sequence of earthquakes in Canterbury that included the February 2011 temblor – more than $21bn for private insurers and $10bn for Toka Tū Ake EQC as of 2022. While the ICNZ expects most claims to be concluded in a matter of months, it adds that many homes and commercial buildings will require work, and in many cases rebuilds, that may take more than a year to complete.

Furthermore, this year’s InternetNZ Insights survey showed that 78% of New Zealanders at least sometimes use their home as their place of work, and it’s clear that many claims are not as straightforward as they might have been a few years ago. No two claims are the same, but having an experienced advocate on your side to help expedite the process and protect your interests may not only save time but also provide some peace of mind and ensure the best outcome financially.

Following an event, an insured should make an insurance claim, after which an insurer will assess the damage and decide what to do with the claim, but this is a process that takes time. Immediately, people are usually entitled to temporary cover; however, this only lasts for a limited time (depending on your policy). Once a state of emergency is declared, the government has powers under the Civil Defence Emergency Management Act 2002. This means that the Civil Defence Emergency Management/council officials can step in and do rapid building assessments based on damage and identify which buildings can be accessed or will be restricted. They have extensive powers, including the power to issue a sticker. The colour of the sticker indicates whether you can access the building or property or not.

Usually, red stickered properties are assessed first because they are more critical and considered more dangerous to life and limb. If the property is red stickered, no one can access the property. Access is restricted. This makes it difficult for the insurers and/or any engineers and/or any geotechnical engineers to assess any damage. Until the property is assessed, an insured is not able to access or live in the property. This causes difficulty and delay in assessing damage and obtaining any technical reports and can delay any insurance claim being processed and/or paid out. If a property is yellow stickered, this may also cause difficulty or delay. Once the damage has been assessed, only then will the insurer either pay out the sum insured or reinstate depending on the policy. The question is whether the damage can be repaired or the property can be reinstated, and there is a question as to whether the owner will be compensated for the loss of value in the property and/or the land and who is going to pay and in what contributions – the insured, EQC, the insurer and/or the government.

“There is a question as to whether the owner will be compensated for the loss of value in the property and/or the land and who is going to pay and in what contributions”

Kate Sheehan, Kate Sheehan Lawyers

Any videos and/or pictures, ie photos of the damage, should be provided.

Usually only six to 12 months (the length depends on your business interruption cover).

How are various types of insurance claims set in motion?

What information should be provided in a claim for damaged property to ensure it goes smoothly?

What does a red or yellow sticker (or lack of one) mean in terms of an insurance claim?

Traffic light stickers for damaged buildings

A red sticker means no one is allowed to enter the building because of the high level of risk. This risk might be from the building itself or from nearby buildings or unstable land.

A yellow sticker means that entry to the building is restricted, and it cannot be used, or you cannot enter except under supervision for a limited time or on essential business.

Red sticker (red light)

Yellow sticker (orange light)

A white sticker means that your building can be occupied. It doesn’t mean that the building is not damaged. Be on the lookout for damage, and contact your broker and/or your insurer.

White sticker (green light)

Source: Kate Sheehan Lawyers

How long is a piece of string? It really depends on the ability of the respective insurers to assess and/or pay out any claims as soon as possible.

When can a decision on a claim be expected?

Inform your broker and insurer as soon as possible.

What happens if you forget to claim for something, or you realise you have made a mistake?

Business interruption is always tricky. If you have suffered a total shutdown, obviously there should be some cover available, but the question is around how the insurer is going to assess the amount payable, ie in terms of turnover over the past financial year or the average over the past three years (or more). Assessing the amount payable may be difficult, as some businesses’ turnover and/or financial results may have been affected by COVID-19. Work with your accountant, broker and/or your lawyer to support your claim.

What are the options for people who have had their business interrupted? What information needs to be provided to the insurer in this case?

How long can an insurer’s support for a business be expected to continue?

1. Call your broker. 2. Call Kate Sheehan or your lawyer. 3. One option is to apply to New Zealand’s insurance ombudsman and/or use the insurer’s dispute resolution process. 4. A last resort is to commence court proceedings, but note that you should exhaust alternative dispute resolution (ADR) options first.

What are your options if a claim is rejected in part or full?

What is covered under EQCover relating to storm or flood damage?

Source: Toka Tū Ake EQC

The land under your home and/or any outbuildings (such as a shed or garage) covered by EQCover

The land within 8 metres of your home and outbuildings

The land under or supporting your main accessway, up to 60 metres from your home

Bridges and culverts within the land areas specified here

Retaining walls up to 60 metres from your home and outbuildings that are necessary to support or protect your home, outbuildings or insured land

60m

“Once the damage has been assessed, only then will the insurer either pay out the sum insured or reinstate, depending on the policy”

Kate Sheehan, Kate Sheehan Lawyers

How are various types of insurance claims set in motion?

Any videos and/or pictures, ie photos of the damage, should be provided.

IN Partnership with

RSS

Sitemap

About us

Conditions of Use

Terms & conditions

People

RSS

Sitemap

About us

Conditions of Use

Terms & conditions

People

RSS

Sitemap

About us

Conditions of Use

Terms & conditions

People

Specialty

Best in Insurance

Resources

Risk Management

News

Specialty

Best in Insurance

Resources

Risk Management

News

Specialty

Best in Insurance

Resources

Risk Management

News