For Christchurch home owners - Onsold EQC question

Forums › Home Workshop DIY › For Christchurch home owners - Onsold EQC question - next steps?

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468 posts

Ultimate Geek

#2654742 11-Feb-2021 16:35

esawers: I haven’t heard of many people who have got more than an epoxy repair for a rubble foundation, while there is plenty of people calling out that it’s not a correct repair strategy I don’t know that anyone is actually listening yet.

We engaged a reputable engineer last week to peer review another engineers work, and even he said that the EQC act states ‘as when new’ instead of ‘as new’ and that an epoxy repair would meet that.

I’m keen to hear if anyone has successfully fought that though as we are in the same position

Thanks for that. I would be keen to hear updates on your place if you don't mind. It sounds/looks like an epoxy repair will be recommended by EQC (if damage is found...), so then it becomes a battle of whether we accept it or fight... slim pickings really..

Fred99

13684 posts

Uber Geek

#2654762 11-Feb-2021 16:38

esawers:
We engaged a reputable engineer last week to peer review another engineers work, and even he said that the EQC act states ‘as when new’ instead of ‘as new’ and that an epoxy repair would meet that.

As I understood it, the Act required EQC to meet the T&C of the private insurer's policy, "premier" home policies generally stated "as good as new", some stated "as new". There was another potentially contradictory clause however, forbidding EQC from making "improvements" or "betterment" IIRC may have been the term used in the Act.

Other cheaper policies weren't as generous, reinstatement to pre-quake condition was all that they were obliged to offer. That's a problem if pre-quake condition wouldn't meet building code, EQR whined about our place which didn't have external wall insulation, the builder they had employed themselves refused to fix temporary cladding unless insulation was put in, the final permanent re-cladding was going to have to be done to building code and consented, so put under pressure, they coughed up the cost. Other people in the same situation got charged by EQC for the fitting insulation. Pays to remember that in those early days, people trusted EQC and the government at the time to "do the right thing". That was a mistake. Some of it seemed malicious, much of it probably because everybody was running around like chooks with their heads cut off, and nobody actually knew what the "rules" were, even "the experts".

Also, in defence of EQC, the EQC Act and the funding models sucked. It took a big EQ to find out how inadequate it was. They weren't the only ones, AMI went bust/insolvent, despite passing government prudential standards with flying colours, and having the top AAA rating from the #1 global insurance rating agency, AM Best.

There's nothing wrong with epoxy repairs - if done appropriately and to a good standard. From what I've seen, EQC/EQR often achieved neither.

But if a ring foundation on poor land (TC3) was seriously damaged, the soils underneath altered (liquefaction etc), then gluing it up with kryptonite isn't going to solve the fundamental issue - it'll fall apart again eventually and because of land damage is probably worse than "pre-quake" condition.

Blurtie

468 posts

Ultimate Geek

#2654763 11-Feb-2021 16:40

Fred99:

I couldn't even guess. The work is going to have to be consented, sounds like it's way too much structural repair to be exempt, TC3 rating might mean excavating deeper, compacting fill etc. Then what the contractor reckons he can do with access, ie just prop enough to replace the foundation, if not that means probably disconnecting all services, power/water/sewer etc. If some piles need to be replaced then how many? Maybe it's acceptable to cut holes in floors to do a few - probably not if it's a lot, so the house would probably have to be lifted and propped to give safe access to replace them. They'll also probably end up damaging plaster etc if jacking it up, so then there's the cost of plaster repairs, interior repainting etc. So it could be a big job, maybe that $2-300k ballpark is close.

Then OTOH if the place is habitable and safe and you can negotiate a satisfactory settlement because it should have been written off, demolishing and rebuilding might be the way to go, or selling it "as is", take the money and walk away.

People are paying big money (IMO) for houses in Chch at the moment - especially at the "affordable" end of the market. You should have seen capital gain since 2018.

Talking to a local estate agent and finding out what the house is worth "as is" now, and what it might be worth fully repaired is free advice, even if RE agents are a bit cunning.

As part of the On-sold program, I don't think i'm able to take the money and run... The money paid out has to be used to fix up the damage. But if it's still under-cap, then I guess we can take the money and sell as-is?

We're not really keen to move, especially not in the current housing market. We do like where we are, more the location rather the house. That's why demolishing and rebuilding is sounding so attractive to us.

Fred99

13684 posts

Uber Geek

#2654797 11-Feb-2021 17:20

OK. I don't know the legal side of what EQC is doing now with these repairs/settlements. We took a full and final settlement from our insurer, and I project-managed our repairs. There's no going back from that, hence I needed to consult with a lawyer before signing on the dotted line, as you should also do before signing anything.

(If a cash settlement was an option at the time under the terms of the policy, I don't see why it shouldn't be now, but I'm not a lawyer, and in any case the policies may have stated that the option to cash-settle vs repair was an option that the insurer had, not the policy holder)

esawers

551 posts

Ultimate Geek

#2654846 11-Feb-2021 20:04

The Onsold process doesn’t involve the insurer, it is all EQC
There is no cash payout, if the repair is over 150k they will only pay out as the builders invoices come in, and they put something on your LIM to say it has to be repaired.

Best scenario is they pay for a rebuild, but only after the house has been demolished.

Blurtie

468 posts

Ultimate Geek

#2655041 12-Feb-2021 10:05

Yes - as I bought our property post earthquake, with all known damage scoped/fixed, I'm technically not 'insured' should subsequent quake damage be found, hence why the govt introduced the onsold program I believe. That's just for anything overcap (which is usually where the insurers step in). For any damage found to be under the cap, then I think I'll be able to take the cash and run..

@esawers I would be interested to know how much cost/expenses you've racked up to date that the EQC have forked out for, and the current cost of your repair strategy - and whether a total demolish/rebuild crossed your mind? appreciate that it's sensitive information, so no worries if you'd rather not disclose.

esawers

551 posts

Ultimate Geek

#2655087 12-Feb-2021 10:12

Blurtie:
Yes - as I bought our property post earthquake, with all known damage scoped/fixed, I'm technically not 'insured' should subsequent quake damage be found, hence why the govt introduced the onsold program I believe. That's just for anything overcap (which is usually where the insurers step in). For any damage found to be under the cap, then I think I'll be able to take the cash and run..

@esawers I would be interested to know how much cost/expenses you've racked up to date that the EQC have forked out for, and the current cost of your repair strategy - and whether a total demolish/rebuild crossed your mind? appreciate that it's sensitive information, so no worries if you'd rather not disclose.

Yes we have spoken to our Claims manager about the possibility of rebuilding if our costs reached 300-400k, our scope so far is up to 200k and that doesn’t include any foundation work apart from filling with epoxy.
Every time the builders add something on the cost sky rockets once they add on their extra 10% and contingencies etc.

So far EQC have paid approx 15k for engineer/builders/cavity critter, they paid upfront so we haven’t had to pay anything yet.

Sharesies

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Paul1977

5044 posts

Uber Geek

#2655122 12-Feb-2021 11:03

The Underfoot website says Bevan Craig is a court certified foundation expert. If that's as impressive as it sounds I would have thought it would be hard for EQC to argue if he does come back and say it's earthquake damaged and needs more than just epoxy injections. But they will try.

Never trust any cost estimates from EQC either. They estimated all our repairs to be about $8,000 (that was everything, not just foundation). And independent estimator said $40,000 to do it properly. EQC estimated only $1,000 for epoxy crack repair of foundation, actual cost was about $8,000 for crack repair and new plaster render.

Blurtie

468 posts

Ultimate Geek

#2655129 12-Feb-2021 11:21

esawers:

Yes we have spoken to our Claims manager about the possibility of rebuilding if our costs reached 300-400k, our scope so far is up to 200k and that doesn’t include any foundation work apart from filling with epoxy.
Every time the builders add something on the cost sky rockets once they add on their extra 10% and contingencies etc.

So far EQC have paid approx 15k for engineer/builders/cavity critter, they paid upfront so we haven’t had to pay anything yet.

Thanks for this info. If I remember correctly, I think you kicked off the process just under a year or so ago? So it sounds like you've progressed things along quite far? But it sounds like you've got some substantial damage if the costs are up to 200k without even including foundation work.. I'm not so sure my place would be in the same bracket.

Blurtie

468 posts

Ultimate Geek

#2655149 12-Feb-2021 12:00

Paul1977:

The Underfoot website says Bevan Craig is a court certified foundation expert. If that's as impressive as it sounds I would have thought it would be hard for EQC to argue if he does come back and say it's earthquake damaged and needs more than just epoxy injections. But they will try.

Never trust any cost estimates from EQC either. They estimated all our repairs to be about $8,000 (that was everything, not just foundation). And independent estimator said $40,000 to do it properly. EQC estimated only $1,000 for epoxy crack repair of foundation, actual cost was about $8,000 for crack repair and new plaster render.

Yes, impressive credentials indeed. Although I don't think the report will go as far as proposing a repair strategy, just pointing out unscoped damage is my understanding. It's then up to us to engage an engineer/LBP to determine a fix.. followed by back/forth with EQC to agree/disagree. oh the joys.

Fred99

13684 posts

Uber Geek

#2655178 12-Feb-2021 13:17

Paul1977:

Never trust any cost estimates from EQC either. They estimated all our repairs to be about $8,000 (that was everything, not just foundation). And independent estimator said $40,000 to do it properly. EQC estimated only $1,000 for epoxy crack repair of foundation, actual cost was about $8,000 for crack repair and new plaster render.

This was normal for EQC. Most people never got the costed EQC scope of works, they also refused to release the total based on the concept that if $30k was allowed for, then the contractors would charge all $30k, so they even redacted costs on documents supplied against OIA requests. Builders didn't know what EQC had allocated. If they didn't like doing work to dodgy standard insisted on by Fletcher EQR, then they didn't get work. So it evolved to the point that contracts for "building consent exempt" building repair work was being contracted out to painting contractors, they were the ones bunging scrap timber to pack stuffed piles, putting putty in cracks in concrete etc. The system being incentivised to avoid carrying out work to meet building code - with consent as required - it fell apart, and now there's huge consequences.

Someone at EQC "leaked" scoped cost data and the amount paid to contractors for a whole lot of claims identifiable by claim number, but not the full costed scopes. This created havoc - and threats to prosecute anybody in possession of copies.

Everybody in the trades knew this was going on. The Earthquake Recovery Minister insisted all was good, and repeatedly defended the head of EQC, while condemning people not happy with what they could see as "bleaters and moaners".

The most laughable defence of EQC was a "customer satisfaction survey" that EQC paid money to have carried out. IIRC the conclusion from the survey was that "80% of claimants were reasonably satisfied". However the survey excluded in their tally all claimants who'd lodged an official complaint with EQC through their internal complaints process. 50% of people had lodged complaints.

In the months after the EQ, I believe the bill for "initial assessments" was $100 million. A few months later they conceded that these were an entire waste of time and money, and all of them needed to be done again. The initial assessment at our place was by a Queensland policewoman accompanied by a retired builder who wore glasses with lenses an inch thick, and really should have had a white stick and guide dog with him. They were paying these unqualified folks $100/hour plus free accommodation and living expenses, most were charging out 12 hour days. Teenage children of EQC managers were being employed to do this. Nice work if you can get it.

Blurtie

468 posts

Ultimate Geek

#2655190 12-Feb-2021 14:03

Yikes, that makes total sense on why the scopes were so useless - well for our place anyway.

On our scope, the assessor did identify foundation damage, but didn't really go into specifics (i.e. where, what etc), then proceeded to place an arbitrary figure for repair. - a sum of $1500 to repair. The tech from Underfoot said that this could be used to my advantage in that EQC acknowledged foundation damage, but didn't look to ascertain the actual damage accurately enough. Although, on the flip side, I can see EQC arguing that it did identify damage and the buck stops there...

Paul1977

5044 posts

Uber Geek

#2655225 12-Feb-2021 14:52

Blurtie:

Yikes, that makes total sense on why the scopes were so useless - well for our place anyway.

On our scope, the assessor did identify foundation damage, but didn't really go into specifics (i.e. where, what etc), then proceeded to place an arbitrary figure for repair. - a sum of $1500 to repair. The tech from Underfoot said that this could be used to my advantage in that EQC acknowledged foundation damage, but didn't look to ascertain the actual damage accurately enough. Although, on the flip side, I can see EQC arguing that it did identify damage and the buck stops there...

We had one or two larger cracks just patched with mortar in the initial repair. Years later when we were thinking about selling we said we wanted a re-scope and re-repairs as we felt things had been missed, and a lot of what was repaired wasn't to a great standard.

It was this re-repair that EQC offered us $8,000 for and the independent quote came back at $40,000. We stuck at it and they eventually agreed to pay out the $40,000.

We owned the property during the quakes, so this is obviously different than the "On sold" program. We have since sold and our EQC claim numbers were transferred to the new owners - I assume that's so if anything is discovered that had been missed they would be covered.

I firmly believe the squeaky wheel gets the oil, you just need to be calm, reasonable, and (VERY) patient in all your dealings. And do as much by email as possible so you have a record of everything.

Overall I think we had a pretty easy time with EQC compared to many others though.

Hopefully your report will come through as just minor and easily repaired damage.

Fred99

13684 posts

Uber Geek

#2655227 12-Feb-2021 15:04

Blurtie:

Yikes, that makes total sense on why the scopes were so useless - well for our place anyway.

Even if the intent was good, EQC inspectors were forbidden from any "destructive" investigation. So for example they'd look at / include a crack in a floor slab if it was visible (ie on a polished concrete or tiled floor), but they weren't allowed to lift a carpet to inspect, as it would have to be replaced by a carpet layer.

They'd also not enter a sub-floor unless there were two exit points. (This after an apprentice working for EQR almost died when trapped under a house in the June 2011 M6.4 aftershock. Rising liquefaction blocked the only exit and was about to drown him in mud - luckily the builder found a chainsaw and managed to carve a hole through the floorboards to rescue him).

Fred99

13684 posts

Uber Geek

#2655359 12-Feb-2021 17:25

Paul1977:

Overall I think we had a pretty easy time with EQC compared to many others though.

I think there was a lot of variation depending on which EQR "Hub" was managing your claim, as well as from claim to claim, and from one project manager to the next.

There was a lot of pressure in worst affected areas to keep claims "under cap" by fair means or what looked like foul.

I'm confident that would have been the result of a deal struck between Brownlee and the insurance companies (and the overseas reinsurers) to cover the EQC share of damage repair costs - when that hadn't been updated for decades, the $100k EQC "cap" in the 1980s would have covered a lot of repairs probably up to more than double that of the same damage costed in 2012. The cap and eqc levy should have been increased every year, to keep up with building cost inflation.

The reinsurers were threatening to withdraw from the NZ disaster insurance market completely. Brownlee jumped on a flight to London to attend the annual meeting of reinsurers, where they get together to collude as a cartel - because that's what they are. That's probably also why the NZ government didn't appeal the high court ruling that damage from aftershocks should each be treated as a separate claim, each covered by the $100k "cap". Nobody had thought about that before the Chch quakes, apparently.

Not saying that Brownlee did the wrong thing there, NZ would be in deep trouble if overseas reinsurance for disaster cover was withdrawn. As it is the disaster recovery fund is an empty cupboard that will take decades to get back to where it was - and that was inadequate anyway.

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