Dr Duncan Webb talking to a large crowd in Christchurch in relation to cash settlements from insurers and what they need to consider etc.

1. Cash Settlements
Opportunities and Risks
Dr Duncan Webb

2. Can my insurer insist?
• In some policies the insurer
has a right to pay the cash
equivalent of repair or rebuild
but:
• Did the insurer make an election
to repair themselves?
• Has the insurer represented that
they would manage?
• Good faith…
• Rebuff threats in respect of repair
/ rebuild contract timelines.

3. Full and Final?
• Insurer cannot insist that
your settlement is “full
and final”
• Beware of full and final
agreements if you are
going to repair.
• May be advantages to full
and final agreements
where you intend an
outside of policy solution

4. When should I agree to a full and final
settlement?
• When risks are low
• When you are wanting to depart
from policy
• Different house
• Waiting before undertaking
repair
• Buying two properties
• Note the terms of the settlement
agreement
• “intend to…”
• Repair / rebuild / reinstate /
replace?
• In general must spend on
reinstatement.

5. Can I ask for more cash later…?
• Not if the agreement was
full and final:
• Limited exceptions
(such as fraud)
• Partial settlements are
possible. Insurers may
agree to pay more for:
• Variations
• Increased foundation
costs

6. I find your lack
of faith
disturbing….

7. Whose Costs?
• Insurers will provide an estimate of the reinstatement costs
• No estimate is perfect
• The more work is done the closer the estimate is likely to
be
• Costings need to:
• Identify the damage
• Have a realistic reinstatement proposal
• Be costed at open market rates
• Capture all costs (design, consenting, professional advice
etc).
• It is often wise to take professional advice on costs

8. Partial Settlement: Costs
• If the insurer is not
managing the repair then
the homeowner is entitled to
incur reasonable costs.
• Insurer not entitled to:
• Dictate professionals to
use
• Place caps on cost
• In reality there is a need to
agree process / project with
insurer.

9. Full and Final: Lookouts
• Policy Standard:
• As / when new
• Modern materials and methods
(equivalent, not cheapest)
• Modern building standards /
regulatory upgrades
• Additional costs
• Design / consent / survey /
engineer
• Project management
• Contingency / risk
• Keep a look out for exclusions for
defects / pre existing condition etc

10. Final Comments
• What is your ideal outcome?
• What is your worst case?
• How much risk can you assume?
• What is your appetite for conflict?
• Consider the benefits of finality / control
• Be pragmatic and reason-based
• If in doubt take advice from a third party

11. Judge me by
my size, do
you?