Assigning Insurance Claims
The following article was written by Jerome Toomey.
We are regularly asked whether it is necessary to take an Assignment of an Insurance Claim if the repair work has been completed by EQC or the private insurer. We always advise our clients that irrespective of whether the repairs have been completed, they should obtain assignment of the EQC and private insurance claims so that they will have the residual rights attached to those claims.
There are three reasons for this. Firstly, it allows the purchaser of a property to deal with EQC and the private insurance company regarding any issues which arise from the repair work e.g. poor quality or incorrect materials. It also allows the purchaser to deal with EQC and the private insurer should they discover any further damage which was not picked up at the time of the assessment of the earthquake damage. If the claim has not been assigned to the purchaser then it is likely that EQC and the private insurer will refuse to discuss the matter with the purchaser as they have no contractual relationship with them.
The second reason is that within the EQC claim for material damage is an inherent land claim which may or may not be dealt with by the time a purchaser purchases the property. If it has not been settled by the time a property is sold then the purchaser may be entitled to receive a claim pay-out for any land damage.
The third reason is that EQC have identified areas of Canterbury with increased flooding vulnerability, which may result in pay-outs to the owners of properties where the value of the land has been decreased by that increased flooding vulnerability. Without having the insurance claim assigned EQC will not pay any such sum to the purchaser.
For the above reasons we believe that at a very minimum the residual rights attached to the EQC and private insurance earthquake claims should be assigned to a purchaser on settlement. If you are in doubt we suggest you contact us prior to entering into an agreement so that we can discuss the earthquake claims and if necessary, we can provide the appropriate wording for a clause to be inserted into the agreement.