EQC loses major insurance case

The Earthquake Commission has failed in its attempt to deny insurance to owners of six boarding houses in Christchurch.

EQC tried to argue that boarding houses were not residential dwellings.

The owners of the adjacent houses – the Harris and Morley families – were forced to take EQC to court.

Justice John Priestley rejected the EQC proposition.

“New Zealanders, along with the inhabitants of other highly developed countries, live in homes. Ownership of the structures in which they reside, and the type of people residing with them, vary enormously.

“A person may live with a spouse or partner, with other family members who are older or younger, or alone. A person may live in a property which he or she owns; the property may be rented; the home may be shared with other people (such as the house being used to flat).

“A home may be occupied by people who have a familial connection or by people who know one another well. A home may be occupied by people who were initially strangers. The inhabitants of a home may come and go, for instance when adult children leave the nest and subsequently flop back into it.

“Some people may rent a home for a short term, waiting out the time between selling one home and buying another or orienting themselves in a new city or town until they find a home of greater permanence which they want to buy or rent. A new flatmate arrives to replace a departing one.

“Affluent people may own more than one home. Many people own holiday homes or rent them. Some people, instead of living in a house which they own, or renting an apartment, or being an occupant of a shared rented flat, live in boarding houses.

“These examples are not necessarily exhaustive but they illustrate the diversity of residential situations and homes which are commonplace.”

Justice Priestley concludes that each boarding house was an entire self-contained building and as such was self-contained premises being shared as a home by a number of individuals and therefore covered by EQC.

The judge also noted advice in an EQC publication that states that boarding houses, serviced apartments and time-shares, are not covered by EQC unless they are the manager’s flat, or the owner/manager’s part of the accommodation exceeds 50%.

Justice Priestley says that the EQC documents set out EQC’s perception of the legislation, but they do not determine the legal interpretation of the EQC Act.

c.hutch@clear.net.nz

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4 Comments & Questions

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Mr Hutching. You are the champion for all New Zealand property owners by reporting in NBR a matter as important as this.
Can I please ask that you cast the subject of insurance for homeowners more widely.
I detect a storm looming as everyone realises the insurers trading in NZ are determined by any means to cut their losses by rorting and excessively charging via massively increased premiums.
We can see evidence that as a business, insurance is all about risk avoidance. In other words, the insurance company wants your money at the very lowest risk that they may ever have to pay out.
They are currently testing the market as to the level of premiums we will pay before some drop home and or contents all together. The layers of commission and discounts insurers have offered show they have a lot of fat that can be manipulated. But, of course, they operate as a cartel, in my opinion.
I loathe insurers, and EQC heads the class.

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This article is well written, and it is heartening to see a common sense approach by the NZ courts to such a fundamental issue as what constitutes a residence. I, too, detest insurers when they try to avoid paying claims that are clearly covered - it is a despicable way to operate a business.
The EQC is a government scheme, which is different to private insurers.
But to be clear, insurance is a business, not a charity. Those businesses offer a level of cover and we, the public, accept at the time we take out the policy and premiums are set based on being able to pay claims and maintain profit - as per any other business, big or small.
This does not excuse them from cheating people out of legitimate payouts, but although we don't like paying premiums that is the cost of having cover.
And if you think insurance in NZ is expensive, try getting it in Australia, UK or USA and you will very quickly realise how 'cheap' NZ insurance is by comparison. Having lived in both NZ and Australia on multiple occasions I can assure you there is a significant difference.
I don't like paying premiums any more than the next person - but be thankful you don't have to pay the $10,000 flood premiums that are now being charged in Queensland on top of everything else.

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EQC despicable! Insurance companies, even worse in many cases. People who pay their premiums should not have to fight for what they 'should' be entitled to. Shame on you EQC!

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What's worse than that sadly is the undermining of the individual's right to keep his own property. The government is taking land off private owners in the red zone by force and calling the process "negotiating". What's disgusting with that is they are sugar coating a very simple process of fascism. They steal the land and then allow another independent private developers to build on that very land.
The media say nothing.

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