Southerly by David Haywood

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Southerly: Tower Insurance Have Some Bad News For You

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  • Neil Morrison,

    I don't think Key's referring to this anomaly which David has raised post announcement.

    He is and he isn't as there's two quite seperate anomalies.

    First concerns the insurance companies only paying out for repairs not total loss - on the basis of present policies. That's what Key says most people would find abhorent. The govt's solution is to pay out the claimants for complete loss and then try and get that back from the insurance companies. Which they may or might not get and any shortfall will be met by the taxpayer.

    That is exactly the issue it seems to me the govts plan deals with.

    Secondly, however, is the difference between RV and what the policy holders expected to get from their insurance which in the case of David is a lot less.

    What the govt appears to have done is say we can get people out of the difficulty of repairs vs full payout but for that it will be based on RV. And since that is what all houses will have had done at one specific time then it's probably the least worst baseline/level playing field.

    But it won't be fair for all even if it is the best deal for most.

    Since Nov 2006 • 932 posts Report Reply

  • Hebe, in reply to Tasneem Gould,

    Tasneem I agree with Jeanette King; I see no undertaking to look at the issue. In fact, what John Key is saying is "haven't we done well". And on one measure yes, the solution is better than otherwise, and 2007 GV in urban Christchurch in general is a good thing rather than the canned 2010 valuations.
    But it's still not good for many people, and just wait until the likes of Clifton, Scarborough, Balmoral and Redcliffs hills are red-zoned; their GVs will be way, way off the selling price, hundreds of thousands in some cases.

    The issue is whether land that is irrepairable makes the house on it (no matter its physical state) unhabitable. That is what I expect to see in court, unless there is precedent in law to argue this one.

    Christchurch • Since May 2011 • 2578 posts Report Reply

  • paulalambert,

    I suspect few in the East will be financially capable of taking this to court.
    I'm amazed noone has the option of getting their home repaired onsite and then moving it somewhere else.
    I cycled the length of Locksley Ave today, doing a TradeMe pickup from New Brighton Road. House after house was munted, mostly brick so not so easily moved. All the lovely old wooden villas closer along the river to town would be prime candidates though.

    Another instance of insurance companies seemingly moving the goalposts...
    My annual insurance renewal clicked over a couple of weeks ago, and my cover was summarily reduced from 'Indemnity+Sum Assured' down to 'Indemnity'.
    My home is a 90+yrs wooden villa in the green zone, approx 2km from the river, with not a drop of liquefaction on the property from any earthquake yet. I'm told "its an old house thing" but my premiums have, of course, increased.

    chch • Since Dec 2006 • 107 posts Report Reply

  • Hebe, in reply to paulalambert,

    Why not in that case sell the land to govt, get a cash payout from the insurer to use your own builder etc, move the house and get it fixed after it's moved and plonked in place. One problem with moving a house will be that many of the Stepford-type subdivisions do not allow such carry-on. I hear some even regulate the type and colour of any building, specify type of pets (even breeds of dog). and carwashing day is Saturday.

    Which will not be music to the ears of many Avonside villa-dwellers now red-zoned. What will happen to their chickens and compost heaps? I feel for them.

    Christchurch • Since May 2011 • 2578 posts Report Reply

  • Islander, in reply to Hebe,

    For some of my family Hebe, it will be 'take the money & run."
    Talented & trained people who've hung in for the past shakey shakey 9 months,
    and now realise that the current government isnt interested in retaining such citizens-
    so: Dunedin;Oz:;Auckland, and far north, in order of their going.

    And the South bears their loss.

    And STUFF the current government-

    Big O, Mahitahi, Te Wahi … • Since Feb 2007 • 5643 posts Report Reply

  • Sacha,

    More from govt about what will become of redzoned land, and how holdouts will be encouraged to leave.

    Brownlee said houses sold to the Crown would not be left empty for long.

    "As properties are settled, they'll be demolished and the sites will be cleared," he told The Press.

    "I would like to think that all of those areas will be clear within two years."

    The future of the abandoned areas was unclear, however.

    Key said it was not the Government's intention to transfer the land to the Christchurch City Council and he could not rule out the abandoned areas becoming residential suburbs.

    "We're talking decades, not years," Key said.

    The Government is stopping short of compulsory acquisition, relying instead on the lack of infrastructure.

    Brownlee said: "Why would you want to stay if there's no infrastructure in there for you? And there won't be."

    He was confident "safe and adjacent" properties to the so-called "residential red zone" would retain their value.

    It was suggested at yesterday's press conference that nearby property owners would have to look towards a wasteland, but Brownlee said the abandoned areas would end up being "relatively attractive".

    Government-contracted engineers have suggested some areas may have to be raised two metres before being remediated.

    Brownlee said it would be "at least seven years" before houses could sit on that land again.

    Ak • Since May 2008 • 16493 posts Report Reply

  • Ross Mason,

    A sunday of thinking what might have been a good outcome for the citizens of Christchurch could be the basis of a good discussion. We know what the Gummint has offered and what the insurance industry are flinching on, but in the "order of things" and with consideration to the rest of the country who are effectively paying for this event - along with Chch people of course - what SHOULD the support be for those who are forced to leave.

    Upper Hutt • Since Jun 2007 • 1491 posts Report Reply

  • Sacha,

    A snippet from Fran O'Sullivan.

    Cabinet Ministers would have been well aware that more than one international reinsurer has been contemplating legal action against the Christchurch City Council over why developments took place on land which could obviously be compromised by a significant earthquake.

    So, the Government has used its negotiating clout to bring some sense to behind-the-scenes disputes which have been hindering progress.

    Ak • Since May 2008 • 16493 posts Report Reply

  • Islander, in reply to Ross Mason,

    The question is- what should be the helping hand for people TO STAY-

    if my whanau are opting out, so are a thousand others, and for each young & educated others, another 5 trained or enthusiastic young people are heading elsewhere…

    CHCH cant afford that-

    Big O, Mahitahi, Te Wahi … • Since Feb 2007 • 5643 posts Report Reply

  • paulalambert, in reply to Hebe,

    I'm in a green zone, no govt deals on offer. And not interested in living in any other part of Christchurch, I'd rather leave altogether.
    If living on the edge of a demolition area with dodgy power, water and sewage really starts getting to me I can always sell to red zone refugees, there are heaps not wanting to leave this area.

    However, how many times can you shake an old house before it goes over? How long is a piece of string? A couple more big ones and what will happen.... thats the sort of question lots are asking around here, so being bumped down to indemnity-only insurance - even though structurally pretty good, the electrics and plumbing are pretty modern - is a bit of a 'kick a dog when its down' situation. It may well happen to others, I doubt its just me.

    chch • Since Dec 2006 • 107 posts Report Reply

  • Jeanette King,

    @Ross Mason:

    but in the "order of things" and with consideration to the rest of the country who are effectively paying for this event - along with Chch people of course - what SHOULD the support be for those who are forced to leave.

    My list would include:
    - retain the equity they had in their home and property
    - be able to buy an equivalent home (and not have elderly forced to get mortgages)
    - be able to get reasonable insurance cover for new/existing properties

    anything else folks?

    Edgeware • Since Oct 2010 • 27 posts Report Reply

  • Melmac,

    My husband and I are currently in a house in the orange zone. We are in a similar position, with a GV that does not reflect the value of our house. The major problem we have is that the damage to our house was caused by the land, so repair is intimately linked to the land and cannot be separated from it.

    There must be a number of other people like ourselves who can stand up to insurers and put pressure on for them to honour the spirit of our policies. We have a full replacement policy for our house and thought we were safe from significant financial concerns. How wrong we were!!!

    Christchurch • Since Jun 2011 • 7 posts Report Reply

  • Thomas Johnson,

    Talented & trained people who've hung in for the past shakey shakey 9 months,
    and now realise that the current government isnt interested in retaining such citizens-
    so: Dunedin;Oz:;Auckland, and far north, in order of their going.

    And the South bears their loss.

    And STUFF the current government-

    I'm confused about what you suggest the govt should be doing Islander. It cannot "unhappen" the earthquake. It cannot wave a magic wand and rebuild the CBD in 3 months. It cannot make the land along the Avon stable in 6 months. It cannot conjure up similar housing stock to replace that which is damaged or destroyed. It cannot order people to stay in ChCh. It cannot build a new CBD out on that plains somehere.

    What do you think the solution is?

    Wellington • Since Oct 2007 • 98 posts Report Reply

  • Justin May,

    Here in ChCh there is a lot of discussion about insurance companies, and I havn't heard a good word yet about Tower. When the dust has settled here, I doubt that they will have any clients in ChCh. Of course we can't change insurance companies until the dust has settled, so they will rip-off a lot of people before then.

    It's not only house-owners, but tradesmen are being stung by them. Various tradesmen have come to patch my house (to try to keep it standing until EQC/Fletchers/anyoneWithAnyAuthority shows up - it's been 9 months waiting). Inevitably conversation turns to insurance companies - inevitably followed by a sigh when they discover the unfortunate association with Tower. Apparently they twist and turn and short-change them also.

    Christchurch • Since Jun 2011 • 1 posts Report Reply

  • BenWilson,

    I hear some even regulate the type and colour of any building, specify type of pets (even breeds of dog). and carwashing day is Saturday.

    Would anyone owning a character villa even want to live in such a place?

    The worst thing is that such solutions are even being considered seriously. Obviously what everyone who has lost their house wants is the money to just get another one. That insurance company interests dictate that hundreds of people would be considering relocating broken houses is perverse in the extreme. This isn't meant to be a salvage operation, it's a WRITE OFF, and everyone knows it. The government has deemed the areas UNINHABITABLE. Clearly anything that can't be lifted out easily is a write off, and insurances companies weaseling out of their obligations to honor their reason for existence are on the verge of becoming pariahs. That is also perverse, and intervention by the government to make sure it is not so, and that the industry can continue to be trusted, should be a major priority.

    more than one international reinsurer has been contemplating legal action against the Christchurch City Council over why developments took place on land which could obviously be compromised by a significant earthquake.

    It's like insurance companies have no responsibility at all to do any kind of research into the risks they are taking with the things they insure. If not, how do they ever justify being paid a premium?

    There must be a number of other people like ourselves who can stand up to insurers and put pressure on for them to honour the spirit of our policies. We have a full replacement policy for our house and thought we were safe from significant financial concerns. How wrong we were!!!

    Totally. I'm very heartened at the number of first time posters this thread has brought in. The insurance companies are trying to gyp you, there's no doubt whatsoever, and the more of you that get together and angry, the more influence it will have.

    I fully understand that paying out in full for the damage to Christchurch will be immensely costly to insurance companies. The NZ industry certainly is having one of the worst years in its history. But here's the rub - that's exactly what they are FOR. Insurance is supposed to be about protecting people who can't afford to lose from catastrophic loss. That's how it's sold. That's the good faith bargain everyone makes when they take it out, and conversely people who don't buy it take that risk of catastrophe on themselves. It's also part of the reason that insurance companies must have enormous capital resources themselves - if they can't cover the policies they are writing, they are running a business every bit as crooked as a pyramid scheme, and deserve to go to the wall forthwith, after every last person they owe money to gets a piece of what's left.

    It is, however, also a perverse outcome for the nation if this happens, rather like the collapse of central banking would be, and there's every bit as good a justification for government intervention as there is when our finance companies found themselves to be catastrophically over-committed recently. However, and this is what we didn't see (and should have seen) with the banking debacles recently is that any bailout should not come for free. The government has every right to seek massive ownership of these insurers, and to demand reform of the business so that such lies can't be sold in future. I would have very little bitterness if the price of paying everyone in Christchurch full replacement from government coffers, if at the end of that, the government fully owned a bunch of insurance companies that had demonstrated real value by actually honoring their commitments. What person in Christchurch wouldn't reinsure with them at premiums that would be fair (given the new datapoints of what has happened over the last year), keeping such a business in good money?

    I know this is anathema to our current politicians, the idea of enforcing such discipline on big business, but a very loud, very angry shout from the nation might, just might be enough for them to see reason. That's if the nation does actually feel this way. I do, unfortunately, know quite a few people who are "over" Christchurch and don't feel they owe the place anything. I think they're fools, and horribly selfish, because the recovery of our second biggest city is vital to the entire national economy, and who is ever to say the same thing couldn't happen to ourselves?

    Auckland • Since Nov 2006 • 8316 posts Report Reply

  • David Haywood, in reply to Thomas Johnson,

    Thanks to everyone for all the kind thoughts and suggestions. I’m currently investigating the possibility of moving the house (which would be the best outcome for us – much better than total replacement), but it looks to be very difficult from a financial perspective.

    To reply to a couple of Thomas Johnson’s points:

    - Does any insurance company offer a no-strings replacement cover, and at what cost?

    That’s what we believed we had! Given the age of our house, I checked out the conditions extremely carefully. The clause about the insurance not applying if the government put a road through our house seemed very reasonable to me (I wouldn’t expect the insurance company to pay out under those circumstances). But I never dreamed they’d be able to apply that clause to the situation where we have lost our house due to an earthquake.

    It may be that public/legal pressure force a change on Tower (and the others which seem likely to follow the same logic) which will benefit those currently making claims. However it may make future house insurance in ChCh impossible or extremely expensive. (heard someone say yesterday that they are ready to build a new house there, but the builder cannot get construction cover, and they cannot get house cover for when it is completed)

    Well, following this logic then it would be best if insurance companies never paid out on any claims at all – then insurance would be very cheap and available to anyone.

    I think your ‘thoughts’ shows a astonishing lack of empathy, Thomas. Imagine yourself in our situation: you’ve specifically taken out ’Total Replacement” insurance; you’ve paid your insurance bills for years without complaint; but when you lose your house as a result of an earthquake then the insurance company doesn’t honour the “Total Replacement” policy.

    How would you feel in our situation? Would you be happy to lose $200,000 in order that other people could have cheaper insurance? Wouldn’t you feel that losing your beloved home and property so that others in the area could “move on” was sacrifice enough?

    Of course, if you would be happy to lose $200,000 (in order that other people could have cheaper insurance) then I can suggest a simple alternative. I’ll send you my bank details and you can deposit $200,000 in my account – then we’d both be happy, right?

    Dunsandel • Since Nov 2006 • 973 posts Report Reply

  • David Haywood,

    By the way, a number of people have suggested that taxpayers are bailing out people like me. That isn't quite true.

    1. The government will be able to claim my house insurance from Tower Insurance. According to the EQC, my repair bill will run to more than $200,000, which is massively more than the rateable value of my house. So, if the government can argue with Tower that this is the real cost of repairs then they stand to make a profit on paying out on our house.

    2. In due course, the government will onsell our land to property developers. Given that it's a prime riverfront section, given that the land isn't significantly damaged, and given that all the state and council houses will be gone -- then the government could well make a profit on this also.

    So, at least in our case, it's quite conceivable that the taxpayer will ultimately benefit from buying our property.

    Dunsandel • Since Nov 2006 • 973 posts Report Reply

  • Kyle Matthews,

    Why not in that case sell the land to govt, get a cash payout from the insurer to use your own builder etc, move the house and get it fixed after it’s moved and plonked in place.

    As David says, that's likely to be a solution that some will take up. Still some big losses in there though. Moving a house is about $20K? Plus he'd be moving the house, he'd have to build new foundations on whatever piece of land he was moving it to, the insurance company isn't likely to do that for him given their attitude to date.

    Since Nov 2006 • 6162 posts Report Reply

  • Rich Lock, in reply to Thomas Johnson,

    surely the government cannot take on an obligation to put every single resident/owner/business into the same situation as pre-quake. That would be ruinous.

    What you are effectively suggesting is that if both the government and the insurance companies are either not obliged, or not prepared, to pay out, then the property-owning residents of Chch can sink or swim on their own.

    To me, that by itself is unacceptable. Your opinion may differ.

    We can then add into the mix that the government (as de facto owner) will onsell the land for development. Still acceptable?

    back in the mother countr… • Since Feb 2007 • 2357 posts Report Reply

  • stephen walker,

    this talk by ministers of the land being used for housing again in X number of years...

    how can they even mention this without saying that current owners who are being summarily being kicked off would get the right of first refusal at some given price formula? it's mind boggling.

    nagano • Since Nov 2006 • 630 posts Report Reply

  • spartacusblue,

    My quarter-acre red zone section alone was already worth very close to what I'm going to be 'offered' for my entire property, fully renovated cottage included. The section, like the house, has only minimal damage which I was told by both EQC and State (who have been awful to deal with) would be easily repaired and I was happy to wait for however long it took. Being a huge, private section, only a few minutes to malls and town, and with river, forest, and beach a walk away, it will be worth many times what I’m - I think - being forced to sell it for. Where’s, at the bare minimum, my first right to re-purchase it at the same price when that day comes? My RV is farcical, my replacement policy it seems is worthless – given only minor repairs are needed (and that after 9 months of waiting, State has been refusing to confirm with many in our area that a property is a total loss for reasons we now know) - and the property I love, worked so hard to get, and never wanted to sell will someday belong to someone who can afford it. And the bitter irony is that, thanks to Key - not the quakes, that person won’t be me if I accept this ‘offer’. Am I really to be forced to hand over my property for less than I paid for it (and that’s before the extensive renovations and six years of mortgage payments) meaning I can’t get even close to the same thing tomorrow for double what I’m being offered? We’ve been counting our blessings for not having lost a loved one though the past ‘events’, but now this decision, not the quakes, has my family devastated.

    Christchurch • Since Jun 2011 • 1 posts Report Reply

  • Sacha,

    Herald editorial says Christchurch folk should be grateful. Note that it may, as it so often does, represent the views of the National party but not all Aucklanders.

    But it is to be hoped that, after more sober reflection, any disgruntlement would fade. For by any reasonable standard, the people of Christchurch have been well-served by the Government and the taxpayers who will have to fund their decisions.
    ...

    In such circumstances, it behoves the people of Christchurch to count their blessings. Taxpayers do not seek - nor do Cantabrians owe - a debt of gratitude. They are being looked after as they should be, as we all would expect to be in their situation.

    But they know better than any of us that nothing can make it completely right again. What is offered is fair and reasonable, a solid basis for making a new go of things. They will put the silted past behind them with the blessing of all of us.

    Ak • Since May 2008 • 16493 posts Report Reply

  • Sacha,

    Revealing snippet about the mindset behind this, from a story just before the announcement.

    It is unlikely the Government will deem any area so badly damaged it must be abandoned.

    Mr Brownlee said yesterday that no area was too damaged to be fixed.

    "All land can be repaired," he said. "There is an issue then about how easily that is achieved, the time it will take and what will be the disruptive factors for communities."

    Ak • Since May 2008 • 16493 posts Report Reply

  • jh,

    Where would we be had the Canterbury Association not allowed private title?

    Since May 2007 • 61 posts Report Reply

  • Melmac, in reply to spartacusblue,

    Yes indeed!!! It is not the quakes that are breaking Cantabrians. It is the Insurers and the Government. We are also in the same situation where our GV will barely cover the cost of a section.

    We live where we love. By the sea and a forest - but may be forcibly moved.

    Christchurch • Since Jun 2011 • 7 posts Report Reply

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