General
Excess calculation
The invoice pack
Change of ownership
Multi-unit buildings
General
1. What is insurance excess?
Under the Earthquake Commission Act 1993 (EQC Act), every claim lodged with EQC is subject to an excess. An excess is the amount a customer contributes towards a claim that is accepted by EQC. When EQC makes a cash settlement, for example for a contents or land claim, the excess amount is deducted from the final settlement payment.
Customers whose properties have been repaired through the Canterbury Home Repair Programme (CHRP) haven’t yet paid excess for the work managed by Fletcher EQR. These customers may receive an invoice for their excess if it has not already been deducted from another claim settlement.
2. Does EQC have to collect excess on CHRP building repairs?
Under the EQC Act, EQC can only pay for repair and/or replacement of the damage, less the applicable excess, for all contents, building and land claims. Excess amounts have been deducted from cash payments made to customers who are not part of the CHRP programme, so we need to treat all customers the same.
The recovered excess amounts are public money and are invested in the Natural Disaster Fund to be available for future events covered by EQC.
3. Why is EQC asking for excess so long after home repairs have been completed?
EQC prioritised fixing homes over collecting excess in response to the Canterbury earthquake sequence. At a time when there was so much going on for Cantabrians, it was important to get on and do the work, and not wait for homeowners to pay the excess before starting work. This would have led to significant delays in getting repairs completed.
4. What financial or wellbeing support is available to customers?
EQC encourages customers to call our contact centre with any concerns, including if they need more time to pay once they get their excess invoice. Our email address is info@eqc.govt.nz and our phone number is 0800 326 243 and is answered between 7am to 9pm Monday to Friday. When contacting us, you can also request a face-to-face appointment in Christchurch.
In addition, the following agencies can also provide assistance:
• The Residential Advisory Service (RAS) provides free, impartial help to residential property owners who are facing challenges in getting their home repaired or rebuilt after it has been damaged by the Canterbury earthquakes. The service helps you to understand the process you are going through and to make progress in your repairs or rebuild. Call RAS on (03) 379 7027 or 0800 777 299, or visit their website - The Residential Advisory Service website.
• Earthquake Support Coordinators provide information and practical help for those whose homes and lives have been directly affected by the Canterbury earthquakes. The service helps families recover from the effects of the earthquake by working with them to plan what they need and connecting them to services including earthquake-related housing, financial assistance and housing, legal, EQC and insurance help, to name a few. To request an Earthquake Support Coordinator, call 0800 777 846 or visit their website - Earthquake Support Coordinators website.This service is free and confidential.
• The Canterbury Support Line is available if you need to talk to someone about anything other than the details of your earthquake claim/s. You can call 0800 777 846 between 9am and 11pm any day, for free and confidential information, support, counselling and connection to emergency services.
Excess calculation
5. How is excess for a building claim calculated?
For claims where the combined total value of the building repair and related contents settlement is $20,000 or less for the claim, excess is $200 for each valid building claim where damage occurred. If the combined total is more than $20,000 for the claim, the excess is 1 percent of that total value.
For excess purposes, EQC treats building damage and contents damage as part of the same claim (where the contents are in the same building and the damage is caused by the same earthquake). This is why some customers may have already paid all or part of their building excess through the settlement of their contents claim.
6. Will CHRP customers pay excess on every building claim they lodged with EQC?
Not necessarily, as excess is calculated only for those lodged building claims that are valid and can be attributed to an event that caused damage to the building. For example, if a building was damaged in the September 2010, February 2011 and June 2011 earthquakes and a building claim was lodged for every event, EQC will calculate three excesses. The owner of that property will then receive one invoice which summarises all the excess information for that property’s building and related contents exposures.
7. How will customers know if they have no further excess to pay?
CHRP customers who don’t owe any further CHRP excess (because it has been deducted from an earlier claim settlement) will receive a letter advising them of this.
8. If a CHRP customer received a cash payment for some of the building damage and the rest was repaired through CHRP - how is excess calculated?
EQC calculates an excess for each event that caused damage to a property. If a customer has received a cash settlement as well as had managed repairs done through CHRP, they could have paid part or all of their building excess already.
The excess calculation sheet enclosed in the invoice pack summarises all the excess information for the property’s building and contents claims and what excess has already been deducted from cash payments.
9. Is there a cap on how many building claims per property you calculate excess for?
No, but excess is calculated only for those lodged building claims that are valid and can be attributed to an event that caused damage to the building.
10. If a cash payment was made for some of the building damage and the rest was repaired through CHRP - how do you calculate excess?
EQC calculates an excess for each event that caused damage to the property. If a customer has received a cash settlement as well as had managed repairs done through CHRP they could have paid part or all of their building excess already.
The excess calculation sheet in the invoice pack summarises all the excess information for the property’s building and contents claims, and what excess has already been deducted from cash payments.
CHRP customers who don’t owe a CHRP excess will also receive a letter from EQC, informing them that they have no further excess to pay.
11. Is excess for all work carried out on a property, including emergency repairs, added together?
Yes, there will be one invoice per property that summarises all the excess information for that property’s building and contents damage in different earthquakes.
12. Why is the cost a CHRP repair in some cases split across multiple building claims?
EQC insurance cover begins afresh after each event, therefore EQC needs to determine when the damage occurred in order to work out what costs we need to cover and what potentially rests with the private insurer. EQC will determine in which events the building most likely suffered damage based on the best available information.
13. If a property went over cap, but remained in CHRP, how does EQC calculate excess?
If a repair goes over cap EQC will charge excess only on the cap amount for that claim (typically $100,000 plus GST). Costs above the cap amount are recovered from the insurer and a further excess may be payable on this amount (but this is not payable to EQC).
14. If a heat pump was installed during the repairs, was it counted toward the overall repair costs?
Yes.
15. Are the costs for remediating any faulty workmanship included in the excess calculation?
No. If a customer finds a defect with their repairs they will not be charged an excess on the remediation work needed to put things right.
16. If a customer submitted a claim for damage caused by an earthquake after the CHRP repairs were completed, will this be included in their excess calculation?
If there was a second CHRP repair, then yes. However if the customer did not have a CHRP repair for damage resulting from this claim then it will not be included in the calculation. However, if the customer received a cash payment for additional damage, excess would have been deducted at the time of cash settlement, and this will be incorporated in the calculation.
17. For owners of several properties, of which some were cash-settled and some were repaired through CHRP, how will they be advised of any excess already paid?
If a property owner had separate claims for separate properties, they will receive a separate invoice pack for each property repaired through CHRP. For any property that was cash settled, the excess would have already been deducted from the claim payment.
18. What if a contents claim was declined as less than excess, how are these incorporated into the calculation of excess?
This is taken into account and will be counted as excess already paid in the equation. For example, a contents claim for $125 is less than the $200 joint contents/building excess on its own so no payment would have occurred. But when further payments for the claim are considered it is recorded as a contribution towards the $200 minimum if there is building damage on the same claim.
19. Will excess from contents-only claims be deducted from the overall CHRP excess invoice?
No, if there is no building claim for an event that the contents claim is attributed to, no building damage can be attributed to that event.
The Invoice Pack
20. When will invoices be sent?
EQC will send out the first invoices in April 2015. There are close to 70,000 properties in CHRP for which we are processing excess and we expect invoicing will take place until the end of 2015.
Approximately a month before CHRP customers receive their excess invoice, EQC will send them a letter with more information on excess and advising them an invoice is on its way.
CHRP customers who don’t owe an excess will also receive a letter from us, informing them that they have no further excess to pay.
21. Will the invoice pack show the total repair cost?
Yes, the invoice pack will contain a calculation sheet with more detail on how the excess was calculated, including the total building repair costs.
22. I was never told I would have to pay excess, so why should I have to?
As is usually the case with insurance, there is an excess on EQC damage claims. EQC and Fletcher EQR have widely communicated the need to pay an excess in communications with CHRP customers. CHRP excess is covered in the following customer information: Customer Guide to the Canterbury Home Repair Programme, the Householders’ Guide to EQCover and under general information in the Q&A section of the Fletcher EQR website.
23. Is it possible to request the excess invoice now rather than waiting for it to arrive?
EQC can invoice only those properties for which the excess amount has been calculated. Prioritisation of invoices under exceptional circumstances will be considered.
24. Will there be flexibility for paying excess?
All customers will have three months to pay the invoice, or, if more time is required customers can pay by instalments by selecting from a range of payment plans of generally up to 12 months. Information on payment options will be available on the invoice.
25. How is EQC supporting vulnerable people when collecting excess from them?
EQC is working with social agencies and community groups to make sure all possible support is in place before invoicing identified vulnerable people. We will contact vulnerable customers before and after their invoices are sent to discuss their personal circumstances and ensure they are receiving the support they need.
26. I own more than one property that was repaired through CHRP. Will I get an invoice for each property and all at the same time?
Yes, you will get an invoice for every property. The timing of the invoices will depend on when we receive the repair costs from Fletcher EQR and when we have the excess amount calculated for the properties. It is unlikely these invoices will be received at precisely the same time.
27. I have discovered extra earthquake damage to my house after repairs were completed. What does this mean for my excess invoice?
If there was additional damage identified following the completion of repairs, and EQC has been made aware of this, then you will not be invoiced until after the issue is resolved.
28. Who should I contact if I have more questions about my invoice?
If you have any questions email us at info@eqc.govt.nz or call on 0800 326 243 between the hours of 7am to 9pm Monday to Friday. When contacting us you can also request a face-to-face appointment in Christchurch.
Change of ownership
The article Responsibility for paying excess amounts on CHRP repairs explains in more detail who should pay the excess when a property changes hands. [This article was originally published in volume 15 issue 3 (March 2015) of The Property Lawyer, the quarterly journal of the Property Law Section of the New Zealand Law Society].
There’s more information about deeds of assignment on the EQC webpage about transferring a property to someone else.
29. What if the house has been sold before or after the repairs were completed – who gets the invoice?
When collecting unpaid excess on a building claim, EQC is required to invoice the person who owned the property and held the benefit of the EQC claim at the time the CHRP repair was completed. This person will usually have owned the property at the time of the earthquakes and made the EQC claims themselves, or may have bought the property later and had EQC claims assigned to them.
If an EQC claim has been assigned, the deed of assignment might record that a different person is responsible for paying the EQC excess amount. However, this will not change who EQC is required to send its invoice to. Legally only benefits, but not burdens, can be assigned. If you receive an invoice, but have agreed with another person that they will pay the EQC excess amount, then we recommend you discuss this with the lawyer who prepared the deed of assignment. You will still need to make sure that the invoice is paid by the due date, or an alternative payment plan is arranged with EQC.
30. A property I own has had two repairs completed by Fletcher EQR, but only the second repair was completed while I owned it. Will I need to pay excess from the first repair?
No, you will need to pay excess only on the second repair. EQC is entitled to collect excess only from the party that received the benefit of the repair (typically the owner of the house when the repairs were completed).
Multi-unit buildings
31. How do you calculate the excess for building claims lodged by customers who live in multi-unit buildings?
If a customer lives in a multi-unit building where each unit is separately insured, the excess calculation is the same as it is for standalone properties.
However, if the whole multi-unit building is insured by a body corporate or building manager under a single policy of insurance, there will be a single excess covering the whole building for each claimed event. That excess will be 1% of total value of the multi-unit building repair, with a minimum of $200 for each unit disclosed to the insurer when the policy was taken out.
32. My body corporate has been invoiced for one excess for all properties in the multi-unit building. How do we divide the cost of the invoice amongst the members of the body corporate?
EQC's relationship is with the body corporate under the one insurance policy and therefore any invoice excess is sent to the body corporate. How the excess invoice is paid is outside of EQC's control and the body corporate needs to decide.
33. I'm part of a multi-unit building, which is managed by a body corporate, and was settled for my contents claim directly. Will the excess I paid for my contents claim be taken into account for the excess owning for my building claim?
No. If your contents are insured under your own insurance policy separate to your building insurance, then the excess paid is not included in your excess calculation. Both your contents and building insurance need to be held under one policy for the excess to be shared. Most bodies corporate have one insurance policy that covers the building, with each dwelling owner responsible for arranging their own contents insurance.