Client case study of the month

Posted: 9 February 2017

If your home is likely to be a rebuild and you have yet to settle your earthquake insurance claims the decision of the Supreme Court in Southern Response Earthquake Services Limited v Avonside Holdings Limited may be good news for you. 

As was the case in the Avonside Holdings case, rather than having to rebuild the home, many policies contain the right to buy another home in settlement of a claim. The majority of the settlements we are seeing now for homes which have been damaged beyond repair are resulting in cash settlements, in many cases with a replacement home being purchased in an alternate location.
In the Avonside Holdings case the Court of Appeal (and the Supreme Court on appeal) held that in calculating the rebuild cost of the home, there needed to be an allowance for contingencies as well as professional fees. The court held that an appropriate contingency was 10% and also made a 10% allowance for professional fees

This decision is an important one for all homeowners who have yet to settle their insurance claims. Even if cash settling your claim and electing to buy another home, the notional rebuild cost of rebuilding your home should include an allowance for contingencies and professional fees.Another factor in cash settling your insurance claim is that in some cases this will leave you with the option of selling your home on an ‘as is where is basis’.





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Find out more about our Christchurch legal team. Kannangara Thomson provide up-to-date legal advice on everything from family law and wills to corporate and commercial law.

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