Earthquake Commission Act 1993

Schedule 3 Conditions applying to insurance under this Act

ss 27(a), (b), 28(1)(a), (b), (5)

1 Excess

In respect of any natural disaster damage to any one property occurring during any period of—

(a)

48 consecutive hours as the direct result of a natural disaster other than natural disaster fire; or

(b)

7 consecutive days as the result of natural disaster fire—

the Commission shall not be liable to pay or contribute more than the amount by which the amount payable under section 29 in respect of the natural disaster damage exceeds the excess specified in regulations made under this Act.

2 No cover for consequential losses

No insurance under this Act covers any consequential loss (including loss by theft, vandalism, loss of profits, or business interruption).

3 Circumstances where Commission may decline claim

The Commission may decline (or meet part only of) a claim made under any insurance of any property under this Act where—

(a)

the natural disaster damage to which the claim relates was caused or exacerbated by earlier natural disaster damage for which the Commission made payment and that payment was not used to repair the property; or

(b)

the insured person has failed to comply with any law or bylaw, or any requirement pursuant to any law or bylaw, and that failure has caused or exacerbated the natural disaster damage; or

(c)

in the case of any property of a kind referred to in—

(i)

paragraph (c) or paragraph (d) of the definition of the term residential building in section 2(1); or

(ii)

paragraph (d) or paragraph (e) of the definition of the term residential land in section 2(1)—

the property was not constructed in accordance with standards considered appropriate for that property at the time of construction, and the failure to meet those standards has caused or exacerbated the natural disaster damage; or

(d)

the record of title for the land comprising the property, or on which the property is situated, contains an entry under section 36(2) of the Building Act 1991 or an entry under section 74 of the Building Act 2004; or

(e)

there is or has been on the part of the insured person (whether to the Commission or its agents or to the insurance company concerned)—

(i)

any wilful and material misdescription of any of the property, or of any building or land in or on which the property is situated; or

(ii)

any misrepresentation as to any matter material for the purpose of estimating the value of the property; or

(f)

the claim is in any respect fraudulent; or

(g)

the natural disaster damage is caused or contributed to by the wilful act or negligence of the insured person, or of any previous owner or occupier of the property where the insured person was aware of that wilful act or negligence at the time the insured person acquired the property.

Schedule 3 clause 3(d): amended, on 12 November 2018, by section 250 of the Land Transfer Act 2017 (2017 No 30).

Schedule 3 clause 3(d): amended, on 31 March 2005, by section 414 of the Building Act 2004 (2004 No 72).

4 Cancellation of insurance in certain circumstances

(1)

Where—

(a)

the Commission settles a claim in respect of any property by payment of the full amount to which that property is insured under this Act; and

(b)

the property in respect of which the claim is settled is neither replaced nor reinstated to the satisfaction of the Commission—

the Commission may cancel the insurance under this Act by giving written notice to the insured person of such cancellation.

(2)

Subject to subclause (3), every cancellation under subclause (1) shall remain in force notwithstanding—

(a)

the subsequent renewal of the contract of fire insurance relating to the property, or (if the property is residential land) to the building situated on the land, as the case may be; or

(b)

the subsequent issue of a new contract of fire insurance covering that property or building; or

(c)

a subsequent change in the person in whom is vested any insurable interest in that property or building.

(3)

Where the Commission has cancelled any insurance under subclause (1) in respect of any property, the Commission may reinstate the insurance if—

(a)

it receives written application for the reinstatement by any person affected by the cancellation; and

(b)

it considers that the cancellation should no longer apply.

5 Commission may limit its liability in certain circumstances

(1)

Where the Commission considers that any property is in imminent danger of suffering natural disaster damage, the Commission may, by written notice to the insured person, limit its liability for any such damage occurring after the time of receipt of the notice by the insured person to the amount for which the property is insured under this Act at that time.

(2)

Where—

(a)

any natural disaster damage has occurred to—

(i)

any residential building or residential land as the direct result of a natural landslip; or

(ii)

any residential land as the direct result of a storm or flood; and

(b)

the Commission considers that—

(i)

the property or any part of the property is likely to suffer the same, or substantially the same, loss or damage again; and

(ii)

the likelihood of such loss or damage could reasonably be or have been avoided—

the Commission may give notice to the insured person to the effect that it may decline any further claim for any such loss or damage.

(3)

Where the Commission gives notice under subclause (2), it may decline any claim in respect of any such loss or damage occurring after the date on which the notice is received by the insured person.

(4)

Subject to subclause (5), every limitation of liability under subclause (1) or subclause (2) shall remain in force notwithstanding—

(a)

the subsequent renewal of the contract of fire insurance relating to the property, or (if the property is residential land) to the building situated on the land, as the case may be; or

(b)

the subsequent issue of a new contract of fire insurance covering that property; or

(c)

a subsequent change in the person in whom is vested any insurable interest in the property.

(5)

Where the Commission has limited its liability under subclause (1) or subclause (2) in respect of any property, the Commission may remove the limitation if—

(a)

it receives written application for removal of the limitation by any person affected by the limitation; and

(b)

it considers that the limitation should no longer apply.

Schedule 3 clause 5(2)(a)(i): amended, on 1 July 2019, by section 12 of the Earthquake Commission Amendment Act 2019 (2019 No 1).

6 Reinstatement of insurance on payment of claim

Subject to clauses 4 and 5, on the payment by the Commission of any amount for any natural disaster damage to any property, the insurance under this Act shall continue to the same extent as before the natural disaster damage occurred, but the Commission shall be entitled to charge the insured person (or deduct from that payment) for the continuation of the insurance an amount calculated in accordance with regulations made under this Act.

7 Reporting of claims

(1)

On the occurrence of any natural disaster damage to any property insured under this Act, the insured person shall at his or her own expense—

(a)

within the time allowed by subclause (2) give notice thereof, either orally or in writing, to the Commission; and

(b)

as soon as practicable deliver to the Commission—

(i)

a claim in writing for the natural disaster damage, including, in particular, such account as is reasonably practicable of all property lost or damaged, and of the respective amounts claimed in respect of each such item of property, having regard to their value at the time of the natural disaster damage; and

(ii)

particulars in writing of all other insurances covering that property (if any).

(2)

The notice under subclause (1)(a) must be given to the Commission—

(a)

not more than 3 months after the damage occurred (or any longer period prescribed by regulations made under this Act); or

(b)

subject to subclause (2B), after the period set out in paragraph (a) has expired but not more than 2 years after the damage occurred (or any longer period prescribed by regulations made under this Act).

(2A)

However, the regulations may permit the Commission to accept notice given after the time limit applying under subclause (2)(b) if—

(a)

either or both of the following apply:

(i)

the natural disaster damage could not reasonably have been discovered in time to enable the insured person (acting reasonably promptly) to give notice within the time limit applying under subclause (2)(b):

(ii)

the insured person is unable to give notice within the time limit applying under subclause (2)(b) because of absence, incapacity, or other disability; and

(b)

the notice is given—

(i)

as soon as is reasonably practicable after the natural disaster damage is discovered or as soon as the insured person is reasonably able to give notice; and

(ii)

in any event, within the time specified in the regulations.

(2B)

If notice is given after the time limit applying under subclause (2)(a), the Commission may decline the claim if the lapse of time before the notice was given materially prejudices the Commission’s ability to assess the claim.

(3)

The insured person shall, at his or her own expense, give to the Commission—

(a)

such particulars, plans, specifications, books, vouchers, invoices, duplicates, or copies thereof; and

(b)

such documents, proof, and information—

which relate to a claim and the origin and cause of the natural disaster damage, and the circumstances under which the damage occurred, as may be reasonably required by the Commission.

(4)

The insured person shall, at the request of the Commission, provide a statutory declaration of the truth of a claim and of any matter connected with it.

(5)

The Commission may appoint any person as its agent to receive any notices under this clause and to inquire into claims, but no settlement may be effected without the authority of the Commission. All expenses incurred by any such agent, with the approval of the Commission, shall be payable by the Commission.

Schedule 3 clause 7(1)(a): amended, on 19 February 2019, by section 7(1) of the Earthquake Commission Amendment Act 2019 (2019 No 1).

Schedule 3 clause 7(2): replaced, on 19 February 2019, by section 7(2) of the Earthquake Commission Amendment Act 2019 (2019 No 1).

Schedule 3 clause 7(2A): inserted, on 19 February 2019, by section 7(2) of the Earthquake Commission Amendment Act 2019 (2019 No 1).

Schedule 3 clause 7(2B): inserted, on 19 February 2019, by section 7(2) of the Earthquake Commission Amendment Act 2019 (2019 No 1).

8 Rights of Commission as to salvage

(1)

On the occurrence of any natural disaster damage to any property insured under this Act, the Commission or its agent may—

(a)

enter and take possession of the land or building or dwelling where the natural disaster damage occurred; or

(b)

take possession of or require to be delivered to it any of the property; or

(c)

keep possession of the property and examine, sort, arrange, remove, or otherwise deal with it; or

(d)

where the property is a residential building, or land insured in connection with that building, move the building to another site; or

(e)

sell or otherwise dispose of the property.

(2)

The powers conferred by subclause (1) may be exercised at any time until notice is given to the Commission by the insured person in writing that he or she makes no claim or, if any claim is made, until the claim is finally determined or withdrawn.

(3)

The Commission shall not by any act done in the exercise or purported exercise of its powers under subclause (1) incur any liability to the insured person or diminish its right to rely on any of the conditions of the insurance in answer to any claim.

(4)

If the insured person or any person on his or her behalf does not comply with the requirements of the Commission, or hinders or obstructs the Commission in the exercise of its powers, under this clause, the Commission may decline any claim made under the insurance under this Act.

(5)

The insured person shall not in any case be entitled to abandon any property to the Commission, whether or not possession of it is taken by the Commission.

9 Replacement of property

(1)

The Commission may at its option replace or reinstate any property that suffers natural disaster damage, or any part thereof, instead of paying the amount of the damage, but—

(a)

the Commission shall not be bound to replace or reinstate exactly or completely, but only as circumstances permit and in a reasonably sufficient manner; and

(b)

to the extent that the damage is to residential land and consists of or results from ground-forming materials or other debris on the land (including as a consequence of a natural landslip), the Commission shall not be bound to replace or reinstate other than by removal of the debris.

(2)

If the Commission elects to replace or reinstate any property or wishes to consider whether it shall so elect, the insured person shall furnish the Commission with such plans, specifications, measurements, quantities, and other particulars as the Commission may require. No acts done or caused to be done by the Commission with a view to replacement or reinstatement shall be deemed to be an election by the Commission to replace or reinstate.

10 Relocation of building

(1)

Instead of paying the amount of any natural disaster damage to, or reinstating, a residential building or residential land, the Commission may, at its option, relocate the building concerned on the same site or, where that site is unsuitable because of damage which it has suffered or is likely to suffer, to a different site determined by the Commission, being a site that is reasonably equivalent in all material respects to the existing site immediately before the damage occurred.

(2)

If the Commission elects to relocate a residential building, it shall—

(a)

pay all costs of relocation; and

(b)

reinstate the building to the same condition as the building was in immediately before the natural disaster damage occurred, except that the Commission shall not be bound to reinstate exactly or completely, but only as circumstances permit and in a reasonably sufficient manner; and

(c)

where the building is moved to a different site, provide the insured person with a legal right or interest in the different site of the same kind as the right or interest that the insured person had in the previous site; and, upon provision to him or her of this right or interest, the insured person shall transfer to the Commission his or her right or interest in the previous site.

11 Subrogation of rights

The insured person shall at the expense of the Commission, and whether before or after the Commission settles any claim under this Act, do and permit to be done all such acts and things as may be necessary or reasonably required by the Commission for the purpose of enforcing any rights and remedies, or of obtaining any relief or indemnity from other persons, to which the Commission is or would upon its settling any such claim be entitled or subrogated.

12 Mitigation

The insured person shall at all times take reasonable precautions for the safety of the insured property, having regard to its nature; and, in particular, if at any time any part of the insured property or any premises in which any part of the insured property is situated suffer natural disaster damage, the insured person shall take all reasonable steps to preserve the insured property from further natural disaster damage or from natural disaster damage, as the case may be.

13 Amount payable for claims

(1)

Where any claim is made under this Act in respect of natural disaster damage to any property and, because of circumstances relating to the cause of the damage, the claim cannot be settled promptly, the Commission may in its discretion settle the claim on the basis of the value of the property at the time of the settlement of the claim notwithstanding the fact that the value is higher than the value at the time the natural disaster damage occurred.

(2)

Subject to subclause (1), the Commission may settle any claim under this Act on the basis of the amount it would have cost to replace or reinstate the property at the time of the occurrence of the natural disaster damage to the property.