Is it possible for an insurance company or EQC to change their election from a managed repair to a cash settlement after the start date for repairs to begin, and having all consents received, builder engaged and their container on site?
Asked: 27 June 2014
Category: Cash Settlements
In the case of EQC, yes, it is possible.
The circumstances where EQC may decide not to proceed with a managed repair and to settle by payment include:
Pre-existing Defects: where there are significant, pre-existing building defects or deferred maintenance (unrelated to earthquake damage);
Owner’s Requirements: where it is not possible or practicable for EQC to complete timely or cost-effective earthquake damage repairs because of:
• other work that has been, or is going to be, done to the building, by the owner (or their private insurer); or
• rare circumstances where an owner makes completing the work too difficult (for example, by restricting access to the building).
During managed repair work, contractors may discover pre-existing damage or other issues that are not insured under the EQC Act. EQC may choose to cash settle part or all of your claim when this happens.
Southern Response advises:
Yes, this is possible in the view of Southern Response, but only provided the customer agrees
It is not Lumley’s intention to cash settle claims once a construction project has begun, and Lumley does not intend to pursue cash settlement for reasons such as cost escalation in the market which is a common misconception. However, Lumley requires the ability to cash settle a claim where continuation within the Lumley Programme of Works becomes untenable. Lumley’s ability to cash settle would only be relied on as a last resort in circumstances where, for example, there had been a material or repeated breach by a customer of the conditions of the Customer Authorisation letter signed by the customer.