Insurer/EQC changing managed repair to cash settlement

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



15 September 2014

EQC advises:

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.

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Southern Response

29 August 2014

Southern Response advises:

Yes, this is possible in the view of Southern Response, but only provided the customer agrees

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3 October 2014
A response to this question is being worked on and will be posted soon.

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16 December 2015

Lumley advises:

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.


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3 October 2014
A response to this question is being worked on and will be posted soon.

See all answers from Tower >