Flood-hit homeowners urged to ensure all repairs included in insurance payouts

A house hit by flooding with damaged furniture piled up on a sodden lawn in the Auckland suburb of Mt Roskill (file picture). Photo / Rayssa Almeida, RNZ

By Amy Williams of RNZ

An Auckland homeowner says the scope of works from her insurer to repair her flood damaged house underestimates the work needed.

Jen moved out of her Mt Roskill house the day it flooded throughout in January, and described it as a total repair.

“The walls need to be replaced, the kitchen, bathroom, ensuite need to be replaced. There’s quite a significant amount of damage if you can imagine water really gets in everywhere.”

Fully insured, she said her insurer’s offer had left out some aspects of the repair.

Jen is among 459 homeowners in Auckland who have asked the Government’s Claims Resolution Service for help with their insurance. She is disputing the $200,000 payout to ensure all costs are included.

“There’s no replacement of underfloor insulation on there, there’s no costs like requesting documents from the council and professional services,” Jen said.

She said the exterior cladding was underestimated.

“Various things are not super clear, things that could have been reinstated but in the strip-out process have been damaged to the point that they can’t be reinstated,” Jen said.

“Some of it’s bits and bobs that add up and other parts, under floor insulation, is fairly significant.”

Jen said she had the help of friends who were in the building industry to navigate the scope of works.

“It’s stressful. I want to go home but I don’t want to rush through anything and end up causing more problems in the future. I want to take the time now to consider everything and make sure that everything is all sorted and clear.”

More than 1000 homeowners across the country have registered with the service for help with insurance problems following the Auckland anniversary weekend flooding and Cyclone Gabrielle.

Claims Resolution Service director Darren Wright said homeowners should get independent advice before agreeing to an insurer’s payout.

“We are starting to see some insurers send homeowners scope of works and putting money in their accounts,” he said.

“It’s really important that homeowners understand what their rights and obligations are when it comes to trying to settle their insurance policy.”

Wright said homeowners needed to seek clarity on who managed the repair - the insurer or the homeowner.

“Homeowners should avoid incurring any costs until you have agreement from the insurer. This may take time to work through, but it is important you seek their approval before any costs are incurred.

“Any money received from an insurer should be spent on repairing damage to property, otherwise the ability to claim insurance in the future may be put at risk and have implications for those with a mortgage.”

Wright said the service was helping homeowners push back on some scopes to ensure all repairs were included.

“A lot of these homes have been stripped internally. It’s really important that we understand what’s being put back in terms of what might be bracing elements,” he said.

“We are seeing some scopes come through that might not fully make up the claim. But those homeowners are working with us and we’re making sure those are fully scoped.”

A house is buried in mud at Rissington, Hawke's Bay. Photo / Neil Reid

In Hawke’s Bay and Tairāwhiti, that would include silt removal.

“It’s really important that silt is removed, certainly from under the house, but also to understand if any silt’s got into the wall cavities. If silt’s sitting in those wall cavities it will hold water which could be concerning long term,” Wright said.

The New Zealand Claims Resolution Service (NZCRS) is a free service that provides homeowners with independent advice, case management where appropriate and access to legal and technical services after a natural disaster. It has staff in Auckland, Napier and Gisborne. People can seek advice by contacting NZCRS on 0508 624 327.

It has some helpful tips for homeowners:

• If you are a homeowner managing the repair, you should ensure the scope and costing provided by insurers is checked and priced by your builder who is going to do the work. Get your builder to provide a quote to ensure the cash settlement is enough to have the required works carried out. NZCRS can assist you with this process if you require support
• Even if your insurer is intending to manage the repair for you, you should still check the scope to make sure everything is included
• If you have a disagreement with your insurer or are concerned or confused then you should seek independent advice. NZCRS can provide that advice free of charge
• Check the terms of your mortgage. Some banks may use the funds from the insurer to pay down the holder’s mortgage, in line with the terms of their mortgage. Therefore, some or all of the insurance pay-out may not be available for repairs to the property