Posts by David Haywood
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Southerly: Tower Insurance Have Some Bad…, in reply to Yip Yip,
I understand how frustrating and upsetting this but it is not a loophole. It is quite clearly stated in your insurance policy that Tower does not pay out for damage/loss caused by destruction by the government. It will likely be in every other company’s wording. This was a government decision which is not an insurable event.
Thank you for attempting the unpopular job of defending the insurance companies, Yip Yip.
I guess I'd describe this is a legal loophole. I was aware of the clause about government-mandated destruction, but -- like anyone else -- I'd thought that this would be covering the situation where the government wanted to put a road through my house. I wouldn't expect insurance to cover this; I would expect to negotiate a settlement with the government.
The way I see the current situation is this: I paid good money for "total replacement" insurance to protect me in exactly these circumstances -- an event such as a fire or earthquake in which I'd need to replace my house.
And now I'm in exactly that situation. We've lost our house (or soon will) as a consequence of three major earthquakes. One can argue the point and say that it's not a direct consequence, but the earthquakes are certainly the only reason that we've lost our house.
If there had been no earthquakes we would still have our house, right?
Using your logic, you might argue that Tower Insurance should cover no houses at all in Christchurch. An earthquake is -- by definition -- a movement of land. Land is insured by the EQC. The movement of land led to the destruction of the houses. Therefore the damage to the house is caused by the land, which is not insured by Tower Insurance.
The damage to our house is also being 'caused' by the land; but it has just taken a little longer to take place.
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Southerly: Tower Insurance Have Some Bad…, in reply to Ross Mason,
It looks pretty clear, But I have to ask David what is this “book value” you are talking about???
I was using book value as a generic descriptor to cover the various values that various organizations may assign to a property on their financial records (or ‘books’). For example:
(a) The rateable value – based on a tweaked averaging process over a defined area (despite the passages you quoted above the council do NOT visit and evaluate individual houses. They estimate this figure on the basis that I have already described).
(b) The value assigned by a registered valuer – this is supposed to be reflective of true market value, and DOES involve the inspection of the individual house and comparison with recent sales of similar properties. This, as I have already explained, may differ from the rateable value by more than $100,000.
(c) The value assigned by an insurance company – this depends on the policy. In our case it seems to be the point where the repairs cost more than the replacement value. This may wildly differ from the previous values in (a) and (b).
Luckily, I seem to have had more success in explaining this to my local MPs than you (again, I apologize that I am not the world’s best communicator – I acknowledge this as a major failing on my part). They have taken it up with CERA and apparently they understand the issue and are thinking of ways to deal with it fairly.
As I said before, the main point of this post was to point out that "total replacement" policies are not being honoured by Tower Insurance in the way that their customers would have expected.
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Southerly: Tower Insurance Have Some Bad…, in reply to Jeanette King,
(a) see if the govt will accept a higher valuation than the 2007 GV/RV, something nearer to the price you actually paid,
(b) get the Tower assessors back out to see if they will write off the house (though there’s no incentive for them to re-evaluate your house as unable to be repaired). Maybe commission an independent assessment to say that the house is a write-off? I mean, can it really be economically repaired – those gaps between the walls and floors, etc …Thanks for your thoughts and suggestions, Jeanette. I am indeed following up both these courses of action.
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Southerly: Tower Insurance Have Some Bad…, in reply to Ross Mason,
Do the Haywoods still lose on the deal???
In this case, yes, (as Fooman says).
Firstly because we have an old house. The book value of (just about) any old house is much less than it would cost to build that same house again. But in the event of a disaster (e.g. fire), we *would* want to rebuild our house, and that is why we spent good money to purchase total replacement insurance. By taking the option you suggest we would only get book value, and so could not afford to rebuild our existing house.
To put it another way, if we’d have been happy with book value we would have insured the house for book value. But instead we have the case where we paid for total replacement and are being offered book value.
Secondly, the book value in this case is taken from the rateable value. This is not worked out for individual houses, but is averaged across an area with tweaks for different house/property sizes. Our area covers the gamut from the riverside and back inland to an interior consisting of state-house streets pepper-potted with private homes. The averaging process over the whole area means that the houses inland sell for below rateable value, but the houses inland sell for significantly above rateable value.
So for the inland houses, taking the government offer as you suggest is a great idea as they will be paid out *above* the purchase price of these homes. For houses beside the river the reverse is true.
To give you an actual example: one of my neighbours has a three bedroom brick-and-tile house on the river. It would cost about $200,000 to build an equivalent house. But the rateable value for that house is only $56,000. So that is why he has total replacement insurance – because you can’t build another house for $56,000. And indeed, you can’t buy a house anywhere in Christchurch for that price.
Hope this clarifies things…
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Nicky Wagner, one of our local MPs, just very kindly phoned me to semi-confirm what I've been told by Tower. The bit that didn't match is that Tower told me that homeowners could only get their replacement policy if the house had already been condemned; whereas Nicky thought that if the repairs exceeded some theoretical book value then Tower *would* have to pay out for replacement.
At any rate, this still seems outrageous for the homeowners whose houses fall under this theoretical book value.
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Southerly: Tower Insurance Have Some Bad…, in reply to Che Tibby,
i think BlairMacca is right (lost that point in the red mist after reading your tale). isn’t there some devil in the detail there? the Gubbermint should be paying out the pre-2010 valuation of the house, then taking it up with Tower themselves?
As Sally said, that’s Option A. Essentially that’s a very approximate book value for the property, but *not* replacement value. But it’s great for lots of people who only insured their house for book value.
But I’ve been paying for total replacement coverage from my insurance company. So – supposedly – I can take Option B and negotiate directly with my insurer. The only problem is that Tower Insurance are saying it’s repairable, and so they don’t have to pay out for replacement coverage. But if it’s repaired by the insurer (fine by me) then it will be bulldozed in nine months by the government (not fine by me).
The issue – as I see it – is that Tower are using the red zone declaration to weasel out of the premium policy that I paid for, and – effectively – to foist upon me the cheaper policy that I paid good money to avoid.
This will also be applying to loads of other people round here as well.
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Hi all,
Many many thanks for the supportive words and helpful suggestions:
RE:
don't give up, get angry!
Don't worry, I'm not giving up...
if the house is repairable, you could pay to move it to another location
It is repairable, but according to the EQC it has over $200,000 worth of damage. I'm not entirely sure it would survive a trip. But the same idea has occurred to me -- and it may be worth a go.
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Hard News: Christchurch: Square Two, in reply to B Jones,
See now, that just makes me think of the Fire Swamp. I’m not saying I’d build a summer home there, but the trees are actually quite lovely.
I'm sick as a dog tonight (week 2 of a terrible cold) but this comment cheered me up no end.
I shall have to watch out for the Rodents of Unusual Size...
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Hard News: Christchurch: Square Two, in reply to andin,
Stop it your making me want to move down there.
Hey, just reporting what some of the feistier neighbours are saying. I can see where they’re coming from, actually – it’s a horrible step from the cosy inner-city riverside to the battery-hen like new suburbs in the hinterland.
More on this subject here.
As for myself, as I said before, they won’t get me out of here except in handcuffs --or, alternatively (and I may not've explicitly mentioned this before), if they cut off my access to sewerage, water, and electricity.
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Hard News: Christchurch: Square Two, in reply to Sacha,
You’d still need viable area resources like roading and drainage though, regardless of whether individual properties are OK. Could always ask devoted libertarians to live in em I guess.
This is true-ish to a certain extent. But it has to be said that most old houses round here already have their own bores for fresh water and soak pits for grey water. And even if the road is removed you still have river and towpath access. If you have a composting toilet and (in the very unlikely case that electrical services cannot be provided) solar panels + (backup) genset then you could still live here quite easily. I know that some quite normal people are keen to do just that.
Don't forget that, as it stands under the EQC regulations, my neighbour (if forced to move from his undamaged house + section) will not be fully compensated for his land. By my calculations he'd be short more than $100,000.
The Press this morning has some bad news on this:
It is understood the Government will seek to remove even lightly damaged houses in some areas where wastewater and other services cannot be maintained, where the land cannot be built on or where most houses must be removed.
But the same article also has some amazingly excellent news for those affected (if the report is correct):
The package is expected to bring together EQC and private insurance compensation for those whose home or land is no longer viable, with a Government top-up to preserve the equity homeowners had on September 3, 2010, before the first quake.