Earthquake damage claims in New Zealand and the role of an independent advocate

Two layers of cover for one event

Residential properties insured privately against fire generally also benefit from natural hazard cover provided by the Natural Hazards Commission, formerly known as EQC. That cover applies up to a capped amount for the dwelling, plus specified cover for residential land. Damage above the cap, or items outside the scheme, falls to the private insurer under the policy terms.

In practice, claims are typically lodged with your private insurer, which manages the natural hazard part on the Commission's behalf for most homeowners. Even so, the two layers follow different rules, so it is worth asking early which parts of your loss are being assessed under which cover. Commercial buildings are outside the residential scheme and rely on their own policies.

Lessons from Canterbury and Kaikōura

The Canterbury earthquakes of 2010 and 2011 and the Kaikōura earthquake of 2016 produced many thousands of claims and years of disputes. Common issues included under-scoped repairs, missed damage to foundations, disagreements over whether a home should be repaired or rebuilt, and properties whose earlier repairs were later found to be inadequate when they changed hands.

These experiences shaped current practice, but they also show why homeowners benefit from careful, independent scrutiny of an earthquake assessment before agreeing to it.

What makes earthquake damage hard to assess

Earthquake damage is not always visible. Shaking can crack foundations, rack wall framing, loosen chimneys and pipes, and cause floor levels to drift in ways that need instruments to measure. Some damage only appears after aftershocks or months of settling.

• Foundation and floor-level damage requiring survey and engineering assessment
• Hidden damage behind linings, under floors or in roof spaces
• Disputes over whether cracking is earthquake-related or pre-existing
• Land damage such as liquefaction, lateral spreading or retaining wall failure
• Repairs requiring Building Code compliance, consents or engineered solutions
• Allocation of damage between several events in an earthquake sequence

The assessment process step by step

Lodge the claim promptly after the event, even if damage appears minor. Photograph everything, note any changes such as doors that stick or new cracks, and make the home safe. Keep receipts for emergency repairs.

An assessor or loss adjuster will inspect. For more serious damage, engineers and quantity surveyors are usually involved, and a scope of works is produced. This is the critical document. An independent advocate reviews it against the observed damage, may commission a separate engineering or floor-level survey, and challenges omissions or under-priced items.

The outcome may be a managed repair, a cash settlement or, where damage is severe, a rebuild. Each option has consequences for quality control, timing and your financial position, so ask for the reasoning behind the insurer's preferred approach.

Evidence specific to earthquake claims

Strong earthquake claims rely on proving both the damage and its cause.

• Photographs from before the event, such as property listings or family pictures
• Pre-purchase building reports and council property files
• Floor-level surveys and geotechnical or structural engineering reports
• A diary of damage noticed after each aftershock
• Records of earlier earthquake repairs, including who completed and certified them

Timing and the risk of rushing

Natural hazard cover has notification requirements, so do not delay lodging the claim. At the same time, avoid accepting a quick settlement before the full extent of damage is known, particularly where foundations or land may be affected. Ask whether a settlement can be reopened if further damage is discovered and get the answer in writing.

If you are buying a property in an earthquake-affected region, ask for documents showing previous claims and how repairs were completed, since unresolved issues can follow the property.

Disputes and where to take them

Use your insurer's complaints process first. The Natural Hazards Commission also has its own complaints and review processes for decisions on natural hazard cover. Disputes with private insurers can usually be taken to the insurer's dispute resolution scheme, such as the Insurance and Financial Services Ombudsman Scheme or Financial Services Complaints Limited. Complex or high-value cases may require legal advice and court proceedings.

Picking an advocate with earthquake experience

Choose someone who has handled claims involving engineering assessments and the natural hazard scheme, and who works with qualified engineers. Ask for references from similar claims, confirm their professional indemnity insurance and read the engagement letter carefully. Be wary of anyone offering guarantees about the outcome.

Earthquake claims reward patience, evidence and engineering input. expertdassure.com recommends understanding both layers of cover and testing any scope of works carefully before you sign.