EARTHQUAKE UPDATE. Your claim settlement options. Starting repairs and rebuilding. The good news... PERSONAL INSURANCE DECEMBER 2011

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1 EARTHQUAKE UPDATE PERSONAL INSURANCE DECEMBER 2011 Welcome to our December Customer Update. Many people have told us that they found the information in the November Update helpful which is really good to hear. In this Update we cover: Your claim settlement options Starting repairs and rebuilding in Christchurch Your claim process Other issues We know that a key concern for Christchurch residents is working out when it will be the right time for them to rebuild or repair their homes. This decision is influenced by issues such as land stability, EQC s land remediation plans, seismic activity, the new technical foundation categories and discrepancies between Insurers and EQC s damage assessments. Your claim settlement options All of the above factors may influence how you decide you would like to settle your claim. In brief your settlement options are: Rebuild or repair your building, using your own builders and have us pay the costs as you incur them; or Take a cash settlement; or Work with us and. Determining the best settlement option for you will depend on your individual circumstances. We will be providing you with specific information about your options early next year. Starting repairs and rebuilding If you choose to work with us and we have developed an analytical tool named CHIP (Christchurch in Progress) that examines extensive data and identifies areas which are Good-to-Go i.e. where we are able to offer the services and benefits of working with MWH Mainzeal. We are developing long-term project schedules to help us allocate resources, and plan and communicate possible timeframes for rebuilding and repair across Canterbury. This scheduling will take into account the individual circumstances and needs of our customers amongst a number of other factors. We will update our customers with this information in early Realistically, for some parts of Christchurch, it will be several years before repairs or rebuilding will be completed. We know this will be disappointing for many customers but we want to be as upfront as we can on possible timeframes so our customers can consider their options and think about the future. The good news... We are starting to contact the hundreds of personal customers in the areas who have, at this 1

2 point, been identified as Good-to-Go to discuss in detail the claim settlement options mentioned above. If customers choose to repair or rebuild using s services then the next phase of their rebuild or repair can start straight away. The CHIP map shown below outlines the areas that are Good-to-Go (pink) and the Not-Yet areas (blue). As additional Good-to-Go areas are identified we will include the latest map in Customer Updates. The Claim Process The four key phases of a claim for the rebuilding or repair of a residential property are shown below. All customers go through Phase 1 then, if you choose to use the services of Phases 2 to 4 shown below will get underway. If you manage your own build or decide to cash settle you will need to organise Phases 2 to 4 yourself. 1. Assessing and agreeing your claim 2. Planning, design and consent 3. Rebuilding or repairing 2. Completion and handover 2

3 Phase 1 - Assessing and agreeing your claim (shown below) has three key steps: making your claim assessing your claim; and your claim settlement decision. 1. Assessing and agreeing your claim Making your claim Assessing your claim Cash settlement decision You lodge your claim with us Your Claims Consultant appoints your Loss Adjuster Your Loss Adjuster visits your property to complete an initial assessment visit and complete a detailed report of the damage determine if your property is a rebuild or repair and send us their initial report engage further experts for assessment if required provide us with a Reinstatement Report We contact you and outline options to settle your claim You decide whether to cash settle, reinstate yourself, or with After you lodged your claim with us, a Loss Adjuster will have visited you to discuss your insurance and complete an initial assessment of the damage. will have completed their detailed inspection of the damage to determine if your property is repairable or will need to be rebuilt. For most customers these steps have been completed and in many cases more than once after each major event. If the damage to your property requires further assessment, then other experts e.g. structural and geotechnical engineers will be engaged to investigate the damage. Your Reinstatement Report includes a full Scope of Work which is prepared by a Quantity Surveyor from the information collected by our building surveyors. If you choose to take a cash settlement your Scope of Work will be prepared and costed at that time. However, if you choose to reinstate your property it is best to finalise your Scope of Work as close as possible to starting construction because costings are likely to change depending on when your project goes ahead. If you are in a Good-to-Go area and choose to use the services of then Phases 2 to 4 get underway. will appoint a Project Manager who will agree the Scope of Work with you, provide you with a list of builders that you may like to consider, discuss and agree the proposed costs and time frames and then assist you to co-ordinate your rebuild or repair. We will pay all costs associated with the project management service provided by. 2. Planning, design and consent You meet with your Loss Adjuster & Project Manager to discuss how it will be repaired or rebuilt Any design work required is completed filalise the full Scope of Work Your Loss Adjuster & Project Manager visit to discuss and agree the Scope of Work. You sign when you are satisfied will obtain quotes from builders and review these with you to identify a preferred builder When you are happy to go ahead, organises the contract & building project insurance. You sign if satisfied The builder ensures all ncessary consents are completed Once these are received, we authorise the builder to start work Phase 2 Planning, design and building consenting begins. Step 1 is to meet with your Project Manager and Loss Adjuster to plan the project. If design work is required this will happen at this stage. Once design documentation is finished building consents can be applied for. The Scope of Work will generally be finalised at this time. This is then used to obtain quotes from builders and when you have selected your builder you sign the contract with them and work can begin. 3. Repairing or Rebuilding Excavate the section & lay the foundations Construct the framing Put the roof on windows Put on the exterior cladding plumbing & wiring Fit insulation Put in the doors cabinets & interior lining Tiling Final plumbing & electrical work Paint house & complete any finishing Lay floor coverings 3

4 Phase 3 Repairing and rebuilding commences. We have shown above the general order of construction for a property. These steps may change depending on the damage to your property and whether it is to be repaired or rebuilt. Your Project Manager will work through this process with you. 4. Completion and handover Repair or rebuilding is complete Your builder provides warranties, and certificates for code compliance and maintenance will send a final report to you and us We confirm with you that your claim has been settled Phase 4 Completion and handover. Once the work has been completed and your builder provides warranties and code of compliance certificates, we will check that you are satisfied with all aspects of the reinstatement and then close your claim. EQC and Insurer Discrepancies We mentioned in our last Customer Update the discrepancies between EQC and insurer assessments of the damage per event. In many cases both we and EQC have assessed the damage but depending on when these assessments were completed and the methods of repair, the estimated costs of the damage per event can be different. This is an industry wide issue and insurers are working with EQC to find a long-term solution as we need to ensure that customers receive the correct amount of money from EQC and us. Until these discrepancies have been addressed we are unable to progress the claims that are affected by this issue. For customers who have been identified as Good-to-Go we are discussing their individual claim with EQC to reach mutual agreement on the scope of damage and estimated costs per event to progress things as quickly as possible. This process may take some months to resolve but we will keep you up-to-date on the action being taken to sort this issue out. EQC excluded items If your claim with us is only for EQC excluded items (such as paths, driveways, fences, swimming pools and some retaining walls) and you are in our Good-to-Go zone we are able to begin arranging the repair of these items with you using the services of. Repairing this type of damage requires different skills and resources compared to the full rebuild or repair of a home. has agreements with a number of Christchurch s key contractors who specialise in this type of work. We want to assure you that the use of these contractors to repair this kind of EQC excluded damage will not impact on the resources allocated to the major rebuilds or repairs. We will contact you when you are in a Good-to-Go Zone and discuss your options with you. If you are not in a Good-to-Go zone we will be sending you specific information about your options early next year. A full list of EQC excluded damage can be found on New technical foundations guidelines In November the Government introduced three new technical foundation categories for residential land in the Green Zone. 4

5 These categories (TC1, TC2 and TC3) specify the different types of foundations required when a house is repaired, rebuilt, or building extensions are carried out. As a general guide properties in TC1 and TC2 can be built according to current guidelines, while properties zoned TC3 will require sitespecific geotechnical investigations and new foundation designs. TC3 foundation designs are still being tested by the Department of Building and Housing (DBH). EQC is in the process of assessing all land and expect to have completed all these land assessments by early Once EQC have published this information we will be able to determine which of our customer s properties require land remediation by EQC and/or a geotechnical assessment. Information on your zone and technical category can be found at If you would like further information on the categories you can visit the CERA or DBH websites or In closing We are really pleased to be underway in Canterbury and each day we make further progress in settling claims and giving customers options for them to rebuild and repair their properties. We are updating and reviewing information from CHIP each month to define areas where we can work with to get started. We will continue to keep you informed with these regular Customer Updates but if you have any queries please talk to your insurance Broker or Adviser or contact your Claims Consultant. We know this has been a very difficult year for you and the people you care about. We are determined to drive the settlement of claims, repairs and reinstatements to help ensure a better year in Our best wishes for the holiday season and a safe Christmas for you and your family. Please note that the information contained in this document is indicative only and is subject to change. Every situation will vary depending on the type and scope of the insurance cover you have and the circumstances relating to your claim. It is important to seek any updated information, refer to the full terms and conditions of your insurance policy, and talk to your legal, technical and professional advisors about your specific situation before making any decisions. 5