How To Deal With Southern Response

Transcription

1 Questions and answers from the customer meetings on 12 February These questions were asked at our customer meetings on 12 February. We re now providing more detailed responses, which may be of interest to more of our customers. We ve categorised the questions into seven categories: detailed repair/rebuild analysis (DRA), EQC joint review, red zone, repair/rebuild, build contract terms and conditions, disputes and other. Detailed Repair/Rebuild Analysis (DRA) Does Southern Response guide engineers about what solutions they should provide or is the outcome purely their opinion? The solutions our engineers provide are purely based on their professional opinion and expertise. All solutions offered will meet the Building Code and other relevant legislation. Is it Southern Response s policy to be open with their clients and provide detailed information about dollar amounts? It s our policy to provide an overall amount to rebuild your house rather than provide a detailed list of costings such as door handles and taps etc. If requested, we can provide a cost construction breakdown of costs from the DRA which will enable a quantity surveyor to review our cost estimate in detail. If Southern Response offers cash settlement, do you pay cash or do we do the repairs ourselves and then you pay the bills? If you accept our cash offer, you (or your bank if you have a mortgage) will receive the cash amount and it becomes your responsibility to do the repairs. We are required to advise AMI that you have taken a cash settlement. Will the budget that was assessed a year ago increase with the escalated building costs especially if you end up at the end of the build queue? If you are in the build queue we will assess and address any applicable escalation. This will be calculated when the design of your property starts (around three months before construction starts). We have a 22 year old house with Hardie cladding and a Rockcote cover that is cracked and has some water issues but we had a water ingress report done that showed the house was fine. Are you trying to get out of paying claims by saying that houses are leaky and that we have to fix and pay for damage ourselves? I had to get a lawyer to help me with Southern Response and the outcome of the meeting with Southern Response was that I was forced to take a cash settlement. Is that common practice? Under your AMI policy, if your house is damaged and can be repaired, there are two settlement options available to Southern Response. The first is to repair any insured loss or damage and the second is to pay you the cost to repair the insured loss or damage. We will meet claims for the insured loss or damage (earthquake), but we will not pay for or respond to actual or potential historical water ingress issues that are not connected with the earthquake damage.

2 Why is the costing of a geotechnical and engineer s report not included in a DRA? Southern Response instructs Arrow to provide an indicative cost estimate to rebuild or repair your existing house. If you elect to build, we will pay for additional costs as they are necessarily incurred, including geotechnical and structural engineering advice. Joint review If an EQC pay-out is higher than Arrow intends to spend on a repair, can customers negotiate cash payment for out of scope work if they decide not to get Arrow to do their work? Yes, cash settlements are available for out of scope work. If there s an over cap payment from EQC, will a joint review be necessary? Not necessarily. However most houses have been damaged by multiple events - predominantly the September 2010 and February 2011 earthquakes. This means that Southern Response and EQC have to establish contributions for each event and a joint review may be necessary to do that. If a customer receives payments for multiple events from EQC and is still over cap, do they still need a joint assessment? In some circumstances, Southern Response and EQC may still need to assess their respective contributions for each event particularly when EQC changes its assessment. Southern Response has approx 600 claims held up in apportionment. Most of these assessments are based on DRAs done before the new DBH guidelines were issued and before the cost of land remediation and foundation repairs were known. What s Southern Response doing to correct these scopes of works to help people through the apportionment hurdle? We have a good relationship with EQC and we have specialised teams working with EQC to reach resolution on apportionment. Resolution of apportionment issues between EQC and Southern Response should not be a barrier for customers making a decision. Any additional scope of work will be for foundations and these can be costed separately. Red zone Have all red zone properties been settled? If not, what percentage has been settled? We ve provided offers to 98% of our customers with properties in the red zone. Not all red zone properties have been settled yet but a high proportion have been. What does offered a settlement mean? I ve received a DRA and given feedback on it so am I part of that 98%? No you would not be part of that 98%. We consider that you have been provided an offer when you receive a decision pack, but we recognise that being offered a settlement doesn t mean acceptance. How can customers know their full entitlement if Southern Response doesn t disclose the amounts/breakdown with repairs in the red zone? When will Southern Response come up with a

3 settlement offer for red zone customers in regards to the government s initiative to giving various deadlines? It s our policy to provide an overall amount to rebuild or repair your house, not to list detailed costings such as door handles, taps etc. If requested, we can provide a construction breakdown from the DRA which would enable a quantity surveyor to review our cost estimate in detail. If you have not received an offer, it will be for some other reason that we are happy to discuss with you. I d like Southern Response to make a statement on the red zones. How can Southern Response cost something the government says can t be occupied - why aren t you offering total loss? How come Southern Response is still costing red zone properties if the government said it s not economical to repair them? Your insurance policy responds to physical loss or damage to your house and earthquake damage in the circumstances. The decision by the government to offer to purchase red zone properties, rather than repair wider damage to land and infrastructure is not part of your insurance policy response. How can Southern Response make a viable offer to repair in the red zone when you re not going to do it? Repairs could be completed to a red zone repair property and that is the basis of the assessment (or cash settlements offered for those repairs at Southern Response s discretion). Southern Response is required to repair my house to a consentable standard. Repairs could be completed to a red zone repair property at the customer s request (or cash settlements offered for those repairs at Southern Response s discretion). A building consent can be obtained from the Christchurch City Council, for the repairs and to meet the Building Code and other relevant legislation. Repair / rebuild Does a customer have to accept a repair even if they re over cap and hold a full replacement/as new policy? A full replacement policy means full replacement of the insured loss or damage to your house the damage may not necessarily be to the whole house. Arrow assesses the extent of the earthquake damage to your house and if it s economically repairable we ll repair it, even if you have a full replacement policy. If a claim was originally assessed as a rebuild and is one of the 8% that s been changed to a repair, can the customer get independent advice? You re welcome to seek independent advice (at your expense) at any time and we ll take your documentation into consideration. During the process of a repair or rebuild, are customers allowed to access, examine or photograph any of the construction taking place? Yes, as long as you have a suitable health and safety induction to go on-site. Before a rebuild or repair starts, there is a homeowner health and safety induction. If you d like to go on site, please talk to your Arrow project manager who will liaise with the contractor(s) to arrange a date and time. What if the new land we purchased is smaller than our existing red zone property and our house design needs tweaking to fit the land. Who pays for the plans?

4 Southern Response pays to have your build plans designed to fit your new section size. The contribution we make for design will be in line with the amount that we would have paid to rebuild your previous house. Which is best to follow - Replicate to Policy or Build to Budget? This is your choice and depends on your preferences and circumstances. We recommend you visit our website for further information to help you make your decision. When can we start the pre-design process so we can get our rebuild started? Your house goes into the build queue when you make your formal settlement election to build with Southern Response and Arrow. We will soon be writing to customers who have made a formal settlement election, advising them of the six month period when we expect to begin the design phase of their home. When your project reaches this point, we will contact you to start design and documentation, followed by the build itself. What is Southern Response s approach to ongoing damage while we wait for repairs? What does a customer have to do to ensure they re not told the damage is pre-existing? Please let us know immediately if you have further significant damage occurring while you re waiting for repairs, for example water getting in through earthquake damaged areas. Arrow will assist Southern Response with further damage mitigation measures and will make an appropriate assessment as to whether the damage is pre-existing. If you use Arrow as your project manager and more earthquake damage is discovered after repairs have already started, will that be covered? And what if we discover further earthquake damage ourselves but we re not using Arrow to manage our repairs, will you also cover this? If you use Southern Response to project manage your repairs we ll cover any previously unseen earthquake damage discovered as part of the repair process. If you choose to take a cash settlement to do your own repairs, you ll have to pay for any previously undiscovered damage. Are the higher foundation costs for TC3 land reflected in the DRA? What happens if customers take a cash settlement and then discover that the foundation costs are a lot higher than expected? The DRA is based on the cost of your previous house (including existing foundations). If you ve already settled with us, are not building with Southern Response, and then discover additional costs (such as more expensive foundations), these won t be covered by Southern Response. Prior to electing a cash settlement for a self managed build, we ll ask you to supply a signed build contract. We also cover additional costs such as compliance costs. These must be itemised for our consideration before they are incurred. Are people at the end of the build queue more likely to be changed from a rebuild to a repair because of the escalating building costs? No, because escalating building costs affect both the cost of repairs and the cost of rebuilds. As a matter of policy, we will not be changing to a repair for this reason. Can customers cash settle and do their own rebuild on their site? Yes, this is known as a self-managed build. If through the joint review process Southern Response knows there s clearly more damage than EQC is taking responsibility for, will you debate this for us?

5 We do everything we can to ensure earthquake damage is identified appropriately for you. Our new policy is that we will take responsibility once we are satisfied it is over cap. What portion of an EQC land payout is payable to Southern Response - is it for the entire section or just the footprint the house actually sits on? Can we keep a portion of it? Rather than waiting for EQC to give you a settlement payment for your land remediation, if we require you to assign your EQC land claim to us using a Deed of Assignment (and give us or commit to us your settlement payment if you have already received it from EQC) we can address the impacts of land damage at the same time as we build your house. We will address the building platform to ensure that when we reinstate the house, it will be to a code compliant standard. We may also do other incidental work required to remediate your land at the same time. There is no requirement to pass over your EQC land claim or land payment to Southern Response, but if the payment is required to remediate the land for the building platform and you do not want to do this, we will not be able to progress your build. Who decides the overall DRA figure and if we request itemised costings for that figure, will Southern Response provide those? The overall DRA figure is approved by Southern Response. If requested, we can provide you with a cost construction breakdown on a room-by-room basis. We will not produce an itemised breakdown list. If you require one, we suggest you have your own assessment undertaken and the parties can then compare. Does Build to Budget include fences and driveways? Yes, fences and driveways are included in the budget. We re in TC3 and in the process of Building to Budget but aren t being offered an option on our cladding and roof. We would have preferred Replicate to Policy over Build to Budget. If you are rebuilding you can choose either Build to Budget or Replicate to Policy. Build to Budget gives you flexibility where your land requires a building solution that is different to what you had previously. Brick and tile construction cannot be supported by the foundation options currently available in some TC3 land areas. If you still want brick and tile on TC3 land, we will build this for you, but others may be put ahead of you in our build queue while we wait for the development of economically viable foundation solutions to support heavy designs. Will Southern Response pay escalation costs? We will pay escalation costs as necessary and justified. However, if you advise us that you re choosing not to build for another three years, for example, we won t pay any escalation costs. Is Southern Response giving itself discretion where you should be providing escalation? If the cost to rebuild or repair your previous house has increased from our previous assessment, we ll pay escalation costs. Does the final number on the DRA include the costs for the design and consents process? The offer presented to you includes consenting fees but not design. If we decide to take a pay out, do we end up paying for the design and consent costs?

6 We cover additional costs such as compliance and design costs but they need to be itemised for our consideration before they are incurred. Prior to electing a cash settlement for a self managed build, we ask you to supply a signed build contract. If you have already settled with us then discover additional costs, these won t be covered by Southern Response. Is Southern Response getting volume discounts on consents and are those processes likely to cost more for us as individuals? We pay the same as everyone else for council building consents. Can we see the budget before making the choice between Replicate to Policy and Build to Budget? While the final budget to build with us may not be known until late in the process, the signed DRA can be used as a guideline. We encourage our customers to make the choice between Replicate to Policy or Build to Budget as early as possible. If we elect to move to a different site, would the contribution include the potential for a very expensive foundation on TC3 land? The offer presented to you will be based on the costs of your existing dwelling (including existing foundations). If you elect to build on another site, reasonable additional foundation costs will be considered for the new site. These costs need to be necessary and incurred. If at a joint review EQC says it s under cap and the insurance company says it s over cap, and EQC maintains the claim and does the repairs, some people are getting letters from their insurance companies saying that s the end of their insurance cover. Is AMI doing that? Southern Response is not able to answer on behalf of AMI. Please refer queries about ongoing insurance to AMI for response. What if EQC says our house is a rebuild and Southern Response says it s a repair? We will check the EQC assessment and review our scope of works when the claim goes through the joint review process. Arrow will re-scope the property during the design phase of your repair to confirm our methodology is correct at the time. How is Southern Response able to negotiate a group home price? Some early damage assessments identified a number of properties that had been recently built by group home construction companies. This allowed the assessment of these properties to be completed quickly and a rebuild offer presented. The remaining claims from these group home assessments, that have not yet been settled, will receive a new costing. Other Is Arrow incentivised in their contract with Southern Response to make savings and bring repairs and rebuilds under budget? Arrow, like Southern Response, is incentivised to expedite claims settlement and deliver rebuilds and repairs as soon as practicable and to having costs on budget. Settlements are based on the assessed cost of repair/rebuild.

7 If you re in a cross lease section and share your driveway with three other parties - which all have different insurers - how does it work? In a cross lease situation where there s damage to a shared driveway, you need agreement from your neighbours about what they want to happen, who is going to pay what share of the damage and what sort of replacement materials you want. We can act as the lead insurer for you and contact your neighbours insurance companies, so please contact us if you re in this type of situation. If you and your neighbours would prefer, we can cash settle your claim. Is the billion dollars which the government agreed to help fund only for Southern Response or also for EQC? It s exclusively for Southern Response. Peter Rose in his presentation states that the philosophy behind decisions is that Southern Response doesn t want houses that are substandard to remain when they should be destroyed when in fact as claims are being settled Southern Response is on-selling salvage rights to demolition companies. The companies are not demolishing the homes but are reselling them. Why is Southern Response allowing this when these homes structures have been compromised? A house that is uneconomic to repair will be assessed for demolition or salvage - either in whole (relocation) or in part. Only a small number of houses will meet the standard required to relocate and these houses then require professional engineering and appropriate council consents. Structurally unsound buildings are unlikely to withstand a move or be fixed. If a house is relocated, the contractor must meet required legislative health and safety standards. Disputes What does a customer do if Southern Response refuses to give them a letter of deadlock from which to progress to the Ombudsman in the case of dispute? To give you a letter of deadlock we have to have reviewed your file completely and reached an impasse from which we cannot resolve your claim dispute issues. We have an obligation to make every effort to resolve the dispute by reviewing all information and making a final claim settlement offer to you before issuing a deadlock letter. If you then choose to seek an Insurance and Savings Ombudsman review, all of the file information and reasoning for our offer is made available to the Ombudsman to review. Will Southern Response be abiding by the Ombudsman s rulings and who will determine whether outcomes are fair? We re part of the Insurance and Savings Ombudsman scheme and our obligation is to accept their decision. Customers don t have to accept the Ombudsman s decision and have the right to go to the Disputes Tribunal, District or High Court and present their case. Is Southern Response s disputes resolution process only available when we go into deadlock and is it only an option when Southern Response has made us a cash offer? If you haven t been able to resolve your dispute with the pod handling your claim, you must apply in writing to request a review under our formal disputes resolution process. This can be done at any time and relates

8 to any settlement option or can be for a policy interpretation dispute. If you wish to use the Insurance and Savings Ombudsman Scheme, we must issue a letter of deadlock first. Build contract terms and conditions Southern Response s contract allows Arrow to change the scope of works without consultation with the home owner. What assurance can you give customers that the scope of work won t be changed just to save costs? Our assurances to you during the build process are recorded in our Memorandum of Understanding for building. This sets out how we will build for you and confirms that we will consult with you before instructing the contractor to make changes. If the scope of works needs to be changed before the build work commences, we ll discuss that with you. Ultimately your protection is through our agreement to honour your insurance policy commitments. Why doesn't the Southern Response contract reflect this? It s seriously weighted in Southern Response/Arrow s favour. Southern Response is charged with instructing the contractor and assessing any required action, but the Memorandum of Understanding we sign with you makes it clear that we ll consult with you before making any decision. Southern Response needs to look at the contract and see that so many of its repairs are locked in the documentation phase. We don t believe contract issues are a significant factor delaying claim progress. Temporary accommodation How flexible is the temporary accommodation situation going to be given the absolutely critical rental situation in Christchurch is only going to get worse? Is it possible for Southern Response to pay the temporary accommodation allowance in a lump sum or be more lateral thinking in order to give people more choices, i.e. staying in caravans, buses, portable buildings? If you have elected to build with Southern Response and want to purchase a relocatable building, campervan or an additional property to use as your temporary accommodation, you can request a cash settlement for this. We need to reach agreement around the expected duration of your repair or rebuild in order to work out a settlement figure. This cash settlement may be capped at a percentage of your entitlement because you retain the residual value of the purchased item after you return to your home. Full evidence of purchase and ownership will be required.