EQC to provide cover to on-sold over-cap properties

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Post-earthquake purchasers of houses in Christchurch are sometimes finding further earthquake damage, even where the house has been repaired. There has been uncertainty over whether those purchasers have any claims and who those claims may be against, with a number of proceedings currently before the High Court.

Where the initial repairs were undertaken by EQC, there may now be some assistance for those purchasers. The Government has announced a new policy, providing that EQC will make an ex gratia payment to cover the cost of repair for owners of “on-sold over-cap” properties.

The Government’s initial estimate is that this could cover approximately 1,000 homes, and may cost $300 million. To date, limited information has been made available regarding criteria and process.

Do you qualify?

This new package provides support for “on-sold over-cap” properties. To qualify:

  • you must have purchased a property in Canterbury between 4 September 2010 and 15 August 2019 (the date that the policy was announced);
  • the previous owner must have settled a claim with EQC on an under-cap basis;
  • you must have discovered, after purchasing the property, that the repairs to the property were incomplete or insufficient, either as a result of defective repairs or because the damage was not included in the original scope of works;
  • the full cost of the repairs (including the amounts already paid by EQC) must now exceed the EQC cap of $100,000 plus GST per event; and
  • you must be unable to access private insurance to cover the repairs.

This last factor will depend on whether you obtained an assignment of the original homeowner’s claim, and on precisely what rights were assigned.

You will also need to have obtained an assignment of the original homeowner’s EQC claim. This can still be obtained now, if it was not arranged at the time that you bought the house.

If the original EQC claim was cash-settled, rather than settled through the EQC repair programme, EQC will also need to know who did the work, and what warranties are in place for that work.

What payment will you receive?

If you are eligible for a payment, a new scope of works will be undertaken to assess the work required to repair the damage in accordance with the EQC Act and the Private Insurance Policy in place for the property at the time of the event.

What do you need to do?

If you think that you are eligible for an “on-sold over-cap” payment, you will need to register your interest with EQC. This offer will only be available for one year, until 14 August 2020, so it is important that you do not delay.

If you have any questions about EQC’s ex gratia payment, or would like assistance to record your interest, please contact a member of our insurance litigation team.


Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.​

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