Southerly by David Haywood

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Southerly: Tower Insurance Have Some Bad News For You

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  • DexterX,

    The gin trap.

    In reviewing things over the last few days I can't help think that the deal the Govt, Council, EQC and Insurance industry have done is ill conceived, by this quasi mediation that did not appear to involve independent resourced representatives on the part of the insured (home/ppty owners). The solution found is to remove the insured legal rights subject to the 9-month consideration period.

    I would have thought to be fair to everyone the “big issues” could have been presented to the courts on a case stated basis to provide an “open” point of reference for everyone. In the absence of this then a judicial review of the scheme may be a possibility – the disclosure would be interesting.

    My reading of total replacement is that the homeowner should be able to have the home that they insured rebuilt.

    This link is worthwhile:

    http://www.bnl.co.nz/settling-large-insurance-claims.html

    The article I refer to above states;

    "Most policies also provide for a home to be rebuilt on different land (up to what it would have cost the insurer to build it on the existing section). If this is the case then Mrs A could possibly elect to rebuild her home on a new section, which would almost certainly be worth much more to her than $335,000 + $75,000 offered by her insurer."

    Pegging values at 2007 GVs is cruel, on two counts;

    Firstly although we have had a recession since 2008 – recessions are in effect recessions in the value of wages, a retraction of purchasing power. Consider that although the volume of residential building consents has been down to almost half of what it was pre recession, this doesn’t mean the cost of materials is fixed or decreases, what often happens is that the cost of the materials will rise to compensate for the lost margins lost. The people that own "the plant" still need to cover their overheads and make a profit so this is how they likely do it - since 2008 looking at one strand of materials there was an increase of 25% in 2008 and a further increase of 15% in 2009 and then GST.

    Secondly by the time the rebuild gets underway the insured will have substantially less – the new subdivision are likely to be ready sometime it will be 2012/2013 any settlement an insured rec’d based on 2007 GVs is five to six year out of date – the cost of rebuilding is likely to be significantly greater, the pay out to the insured from whatever source is likely to be first be applied in settling mtges and other charges.

    In essence the platform has been set for some people to lose a half to two thirds of the value of their “homes”.

    There will be no logjam as a result.

    There should be all sorts of safeguards I can think of that should be going into the solution - one example could be that say if you are going to have compensation based on 2007 land values then the value of the average section during the rebuild should be based on those 2007 land values.

    This could even mean that the govt establish the land to be developed as essential public works.

    I hope that this isn't too negative a take on things, but there is a lack of leadership and thought.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • DexterX, in reply to Jeremy Andrew,

    I don't think that there is any intention on the part of Tower to rebuild in the circumstances.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • Lucy Telfar Barnard,

    electricity which could be generated with solar panels and/or a wind generator.

    Nice idea, but... assuming that the council won't be issuing any building or resource consents for the red zone, your options would be rather limited:
    - standard available wind generators would likely require building (possibly resource) consent,
    - solar hot water needs building consent if it goes on your roof;
    - presumably roof-mounted photovoltaic would also require building consent;
    - relying on wind and sun for household energy needs usually achieved in conjunction with wet-back hot water. Depending on your clean air zone and existing solid fuel heating, installing a wetback is either completely forbidden or requires resource consent.

    Unless you're up for civil disobedience (which in this instance I would support), that leaves you with ground-mounted photovoltaic panels and/or LPG as your only energy options. Not impossible, but certainly much harder.

    Also, insurance would not be available, especially if you go for the civil disobedience option, since insurance is generally null if you build without consent. If you have a mortgage, that would be a problem.

    ETA: Also, if the government owns all the land around you and decides bits of it aren't roads any more (they're trying to force you off, remember) and trespasses you from that land, your only access in and out will be by the stinky (see below) river. Again, not impossible (as any Venetian will tell you!), but worth bearing in mind.

    Wellington • Since Nov 2006 • 585 posts Report Reply

  • Hebe, in reply to webweaver,

    I like it. You'd have to factor in the cost of a big mother of a 4wd to cope the state of, or lack of roads. Living by the river stinks, literally, now and could be like that for some time (years?) so with small children it wouldn't be ideal. Also the I don't like the long-drops around, there's way too high a water table to have lots of people doing that; maybe a clivus multrum-type closed facility?

    But if you could hold out for 10 or 20 years, the desirability of a characterful riverside property will return. And they'll be a rare commodity.

    But the real point of this post is to let the world know we are warm: the Yunca has landed, and our family and house is truly warm and drying out for the first time since February. EQR make-safe really did do the bizzo for us: heat, hot water running, safe electrics and a dangerous and difficult chimney down. So, as much as I was reluctant to go with Fletchers, the individuals involved did a fine job of work for our whanau. It's easy when looking at the big picture of awfulnesses like the Haywood house to overlook all the good that is happening too.

    Christchurch • Since May 2011 • 2899 posts Report Reply

  • Sacha,

    AMI's boss fronted on Campbell Live tonight and verified the position of the insurance companies as we've been discussing - 6 min clip.

    He said that after extensive negotiation with the industry and his company, the government's Option 1 package is the answer to this problem where replacement does not actually mean replacement. Oh, and that raises no moral issues.

    Comments on the story seem refereshingly sane so far.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Ross Mason,

    DexterT

    There should be all sorts of safeguards I can think of that should be going into the solution - one example could be that say if you are going to have compensation based on 2007 land values then the value of the average section during the rebuild should be based on those 2007 land values.

    There is (or should that be there should have been) a mechanism for the Govt to step in and acquire subdivisional land that could be sold to the chucked off zoners at the value of their properties. The govt might even have been able to acquire sections at 2007 GVs +10% so that the present owners might not be tempted to up the price.

    Or, these sections could be offered as a clean swap, section for section. Maybe even on a ballot system.

    It does seem to me that the opportunity for a wee bit of profiteering is about to hit the fan around the Plains.

    Upper Hutt • Since Jun 2007 • 1590 posts Report Reply

  • Hebe, in reply to Ross Mason,

    There is (or should that be there should have been) a mechanism for the Govt to step in and acquire subdivisional land that could be sold to the chucked off zoners at the value of their properties. The govt might even have been able to acquire sections at 2007 GVs +10% so that the present owners might not be tempted to up the price

    But the Government in that case wouldn't be the National Party then would it?

    Christchurch • Since May 2011 • 2899 posts Report Reply

  • DexterX, in reply to Hebe,

    The govt could likely acquire the land under the Public Works Act.

    I just don’t think Key and Co posses the depth to appreciate the layered nature of our economy or how it operates for the non-corporate citizen.

    The govt would have to act as a House of Representatives, representatives of the people, and not as a house of self interest or disinterest.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • Isabel Hitchings, in reply to Hebe,

    EQR make-safe really did do the bizzo for us: heat, hot water running, safe electrics and a dangerous and difficult chimney down.

    Yay! I'm so glad you're a bit more comfortable. We had Fletchers in last week taking our chimneys down. We had five blokes here for the best part of two days and they didn't seem to stop to draw breath. That was just a tiny fraction of what our (moderately damaged but basically ok) house will need to have done. Multiply that across the city and I have a new appreciation of the size of the job we have in front of us.

    Christchurch • Since Jul 2007 • 719 posts Report Reply

  • Steve Barnes, in reply to Lucy Telfar Barnard,

    - standard available wind generators would likely require building (possibly resource) consent,- solar hot water needs building consent if it goes on your roof; - presumably roof-mounted photovoltaic would also require building consent; - relying on wind and sun for household energy needs usually achieved in conjunction with wet-back hot water. Depending on your clean air zone and existing solid fuel heating, installing a wetback is either completely forbidden or requires resource consent.

    Rubbish.
    Especially as the Council is abdicating all responsibility for the welfare of those affected.
    "Standard available wind generators" no such animal. Let's see said council standing in the way of one of these babies a snip, I may say, at $999.
    AND... who could deny anyone having These cuties strapped to your new roof.
    Damn the Council and the sewers they came from, septic tanks for all I say...

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • David Haywood,

    Just a note to say that I am reading all these comments and taking down the many good ideas.

    I’m currently fulltime wading through obscure treatises on foundation design, and will post a blog on this at the end of the week (as it relates to the damage to ‘repairable’ houses in the red zone).

    Self-generated electricity may well be a goer for those who chose to remain in the red zone. Solar will work fine in CHCH, but alas wind is not practical or economic in East CHCH (I did a bunch of work on this is my previous life as an engineer).

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • Sacha, in reply to David Haywood,

    ‘repairable’ houses in the red zone

    Love to hear where Council stands on consenting too.

    Ak • Since May 2008 • 19740 posts Report Reply

  • andin, in reply to Sacha,

    Comments on the story seem refereshingly sane so far.

    The insane semantics and trying to wriggle out of paying all seems to be on t'other side. Maybe this is a weird waiting game to see the size of those adversely affected by this little deal, and if they can just be written off as malcontents.

    raglan • Since Mar 2007 • 1890 posts Report Reply

  • Sacha, in reply to andin,

    if they can just be written off as malcontents

    We can be confident that the political calculus was done by the government's 'brainstrust' well before the announcement. Polling probably underway ever since. Let's see how the public dances..

    Ak • Since May 2008 • 19740 posts Report Reply

  • Lucy Telfar Barnard, in reply to Steve Barnes,

    Rubbish.

    It would be more helpful (as I was trying to be) if you could specify which bit you thought was rubbish. Or were you drawing attention to the fact that any holdouts would probably also have to organise their own regular rubbish disposal? If so, good point.

    Especially as the Council is abdicating all responsibility for the welfare of those affected.

    Agreed (thus my support for civil disobedience), but that doesn't mean they'll stop demanding consents be issued for any work that doesn't comply with the district plan.

    "Standard available wind generators" no such animal.

    Okay, (*cough, Mr Pedantic, cough*) "commercially available wind generators" then. And probably homemade ones too. The problem is that to get good wind you want the thing stuck high up in the air, with good wires to hold it down. And up in the air is likely to mean resource consent.

    Let's see said council standing in the way of one of these babies a snip, I may say, at $999.

    They look lovely. It would be the 6m pole that would be the challenge

    AND... who could deny anyone having These cuties strapped to your new roof.

    Again, they may be fine. But if strapping a solar hot water panel to your roof requires building consent (which it does) then presumably so does photovoltaic. Note I'm not saying that it should, only that it probably does. If you can provide evidence otherwise, I'd be very pleased to hear it. Saying "rubbish" and pointing to attractive products does not constitute evidence. If you could, instead, say "no, it's okay because section bla bla of the CCC district plan allows for xyz," or "my mate wrote to the council before she put in her new 6m high turbine, and they wrote back and said it was sweet, no consent necessary" , that would be rather more useful.

    Wellington • Since Nov 2006 • 585 posts Report Reply

  • Hebe, in reply to DexterX,

    Roger Sutton is empowered to override any council planning he wants.

    Christchurch • Since May 2011 • 2899 posts Report Reply

  • Hebe,

    David, here is a link you may find useful, published early October last year somehwere obscure:
    http://www.nzwood.co.nz/residential-houses-performance-in-the-darfield-earthquake

    Andy buchanan would be well worth interviewing. I haven't seen him get any air time.

    Christchurch • Since May 2011 • 2899 posts Report Reply

  • Ross Mason,

    We are at the mercy of these normal "psychopaths.".

    Book Review: The Psychopath Test.
    Edit: Picked up off Scitechdaily.com

    Upper Hutt • Since Jun 2007 • 1590 posts Report Reply

  • BenWilson, in reply to Lucy Telfar Barnard,

    If you have a mortgage, that would be a problem.

    I'm also thinking that might be the core of the solution too. The banks want their money back too, I expect, and surely have deep enough pockets to go for the insurance companies. They'd only want their piece back, but that's still not something they're going to get with companies like Tower twisting out of obligations.

    Also, it's one possibility to "Who else can we insure with"? My insurance is with the bank that holds my mortgage. If they ripped me off, they're also ripping themselves off. I know they're separate entities, technically, but they're part of the same portfolio for any shareholders in my bank.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Ian Dalziel, in reply to Hebe,

    Roger Sutton is empowered to override any council planning he wants.

    I'm sure he can in the short to medium term and possibly longer, but I doubt that it will be in perpetuity - the Christchurch City Council has already demonstrated that it can forget the lessons the of the past - and twenty years down the track who knows what they'll want to do or change...

    ...encouragingly I see in The Press today that Roger Sutton is keen on house relocations where possible - and AMI have said it may be feasible - so maybe Sutton can instigate or encourage a subdivision that will consist of "heritage homes" like David's rather than the hideous Stepford environments that are the norm.

    ...meanwhile EQC has put a hold on repair work that was due to start about now in the White Zones - or as one commenter aptly renames them - The Wait Zones.

    Christchurch • Since Dec 2006 • 7950 posts Report Reply

  • andin, in reply to Ross Mason,

    at the mercy of

    "specifically, the insanity of the relentless, dauntless, ego-driven, conscience-free, self-actualising and impenetrably confident creatures known as psychopaths. Ronson sets out one side of his fascination with such beings explicitly – a concern that they seem exactly like the type of person most likely to excel in politics and business, and therefore to end up dictating terms to the rest of us. "

    Shudder....

    raglan • Since Mar 2007 • 1890 posts Report Reply

  • webweaver, in reply to BenWilson,

    Also, it’s one possibility to “Who else can we insure with”? My insurance is with the bank that holds my mortgage. If they ripped me off, they’re also ripping themselves off. I know they’re separate entities, technically, but they’re part of the same portfolio for any shareholders in my bank.

    I was checking my full replacement policy with ASB again yesterday and noticed for the first time that although I got it through ASB for my mortgage (also with ASB) it actually says it's underwritten by IAG.

    When I called to make a claim yesterday, the recorded selections message was along the lines of "if your policy is underwritten by IAG, press 1, if your policy is underwritten by Tower press 2" etc - and when I made my selection my call was transferred to IAG, rather than going through to ASB. Assuming that this is common to all the banks, then they're not actually the ones doing the insuring, are they? I think they're just the middle-man.

    Wellington • Since Nov 2006 • 332 posts Report Reply

  • Steve Barnes, in reply to Lucy Telfar Barnard,

    After trolling through pages of meaningless guff at CCC district plan site I have found nothing regarding either Solar Panels or Windmills.
    There is this…

    2.2.5 Appearance of buildings and sites
    Updated 22 May 2006

    In areas adjoining an important public open space, as shown on planning map 39F, the erection of any new buildings, or external alterations to any existing buildings (excluding demolition), or the use of any part of a site not undertaken in a building, shall be a discretionary activity with the exercise of the Council’s discretion limited to visual appearance

    As for needing Planning permission for putting any energy saving device on your own roof I would tend toward this approach…

    When I was a kid, I used to pray every night for a new bike. Then I realised, the Lord doesn’t work that way. So I just stole one and asked Him to forgive me … and I got it!

    Emo Phillips.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Thomas Johnson,

    Assuming that this is common to all the banks, then they're not actually the ones doing the insuring, are they? I think they're just the middle-man.

    This is the common practice.

    Just been looking through RA/Scoop to see what other solutions have been proposed by the political class, and it seems there is a lot of concern, but nothing firm outside the current government offer.

    This from Brendan Burns

    One big issue raised was whether the Government would make people leave red-zoned land if they had not come to an agreement to leave. Mr Sutton said no decision had been made yet, but residents maintained Gerry Brownlee had said last week that they would have to go. This was confirmed by a member of the media. There was also much concern about valuations, chattels and where people could go. The Kaiapoi Community Board expressed some anger that Kairaki Beach people had been kept in the dark, and that there was only one Waimakariri person on Gerry Brownlee’s Community Forum. Mr Sutton acknowledged that communication with Waimakariri people had left a lot to be desired, and committed to openness, transparency and high-quality communication under his watch. That will be a breath of fresh air. The overall feeling after the meeting, however, is that the Government and CERA have not yet filled in detail for residents around decisions that have been made, and many decisions have still to be made. How can residents feel certain about the future if they don’t get factual information? The detail is simply lacking. Roger Sutton confirmed last night that communities have no right to appeal against their zoning, but he agreed to provide Kairaki Beach people with their geotech data so that the community’s geotech people could peer review it.

    Of interest is the complaint about lack of detail (c.f last week's pressure to get an announcement out), and the unclear status of red zoned land for continued occupation.

    Given that the current buyout proposal is unlikely to be substantially revisited by the Nats' you have to wonder if Labour will start looking for and promoting an alternative solution.

    I would think that if there is a sufficient number of hold-outs who want to remain living in the red zones, then it will quickly become politically impossible to forcibly remove them, or even cut off power supplies (water/wastewater may be different, but these are a lot easier and cheaper to self-provide as many already do around NZ).

    Wellington • Since Oct 2007 • 98 posts Report Reply

  • BenWilson, in reply to webweaver,

    Assuming that this is common to all the banks, then they're not actually the ones doing the insuring, are they? I think they're just the middle-man.

    Pretty sure you're right there. I just found my underwriter in the world's tiniest print at in the footer of my insurance document, with waiver of all responsibilities on the bank to actually do a damned thing. But still, the house does actually belong to the bank, so it's got to be in their interests to get a payout. A lot of people will simply go bankrupt leaving a big bad debt, without it.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

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