Dr Webb's slide set from the 11th August EQCfix.NZ launch. AN overview of concepts with land. EQCfix.NZ will provide an information set, like those found on the website for Limitation and Pre-1970 homes, over the coming weeks. Watch out for it.

1. IFV & ILV
CLAIMS
DR DUNCAN WEBB
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2. INCREASED LIQUEFACTION
VULNERABILITY
To qualify for ILV, a property must:
• Have material vulnerability to liquefaction
damage after the Canterbury earthquakes; and
• The vulnerability has materially increased as a
result of ground surface subsidence of the land
caused by the Canterbury earthquakes; and
• The increase reduction in the market value of the
property (i.e. of the insured land and relevant
associated residential buildings combined)
• Note: there is no rational basis for this third
category if remediation is proposed
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3. Pre earthquake
ground surface
Post Earthquake
Ground Surface
Thinner non
liquefying crust
Ground Water Leve
Liquefiable Soil
Liquefiable Soil
Ground Water Level
Non Liquefying Crust

4. INCREASED FLOOD
VULNERABILITY
• Depends on increase in vulnerability due to earthquake (i.e.
damage).
• Modelled on 1 in 100 year flood event
• EQC apply thresholds:
• The flood depth has increased by 0.2m or more as a result of
the Canterbury earthquake sequence; and
• The flood depth has increased by 0.1m or more as a result of
a single earthquake event; and
• The land has suffered observed damage as a result of the
Canterbury earthquake sequence.
• With exceptions – where 2 of 3 exist a site specific inquiry
should be made.
• Note also flooding vulnerability by adjacent uplift – area wide
review needed.
• changes to river heights, narrowing of river banks, shallower
river beds and damage to storm water drains.
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5. 5

6. SETTLEMENT
“If it could, EQC would prefer to settle a land claim
by providing a cash payment based on the amount
it would cost to repair or reinstate the land.
However, for properties with increased
vulnerability to flooding it will often not be possible
to identify a repair method to the land which is
feasible or able to be done legally. Therefore, in
some cases EQC proposes to settle based on
Diminution of Value (DOV)”
• In reality EQC is seeking to settle most or all
claims by payment of the loss of value of the
land (and building).
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7. DOV PAYMENTS WHEN?
• Diminution of value (loss) payments are
appropriate where:
• Repair is not feasible
• Repair is not allowed (e.g. District Plan rules)
• There is no intention to repair
• The cost of repair would be disproportionate
• The land has been purchased after the loss
• EQC (wrongly) presumes that repair will not be
carried out
• EQC will refuse to pay cost of repair unless the
repair work is arranged
• Maximum payable is the value of the damaged
land insured under the Act
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8. HOW MUCH
The loss of value is calculated by:
• Assessing the Pre-earthquake Valuations.
• Identifying the degree of damage
• Identify the construction characteristics
of the house (for liquefaction)
• Calculating the Total Percentage
Discount.
• Final Calculation and Review
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9. EXAMPLE
(LIQUEFACTION)
• Initial value (in 2010/11) $300,000
• Change to the land is major in 100 year
event and moderate in 25 year event (12%
value effect)
• Was not vulnerable before (1% value effect)
• Heavy roof construction (1% value effect)
• Total percentage discount 12 +1+1 = 14%
• Final calculation 14% x $500,000 = $42,000
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10. NOTES
• No adjustment for delay in payment (despite
obligation to pay “as soon as reasonably
practicable” in s 29(4)
• Assumptions made about repair (e.g. if house is
remaining on site ILV is assumed not repairable).
• No clear basis for EQC to refuse to pay cost of
repair unless repair actually arranged.
• EQC will not undertake any repairs itself
• Limitation applies to these claims – from
• when settled (paid or fixed)
• or declined (formally told no claim)
• Note: unclear if you were never informed of
IFV/ILV issues
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11. WHY DOES MY INSURER
WANT AN ASSIGNMENT?
• Insurers can (probably) require homeowners to provide
the land in a state as good as it was prior to the
earthquake for foundation rebuilds
• If land remediation is required to return the land to pre-
earthquake state then this is a homeowner cost
• Insurers have taken a “shortcut” seeking an assignment
of the land claim as a substitute for remediation costs
• Questions to ask the insurer:
• What is the “remediation” – required (enhanced)
foundations are building work not land remediation
• Does the remediation relate to the damage (e.g. if IFV is
the land being raised)
• What will be done with any surplus
• How is the cost of land remediation calculated
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12. CONCLUSION
• IFV / ILV land claims can range from modest to
significant
• The assessment / valuation methods are
technical
• If in doubt ask for a review of assessment and/or
valuation
• EQC defaults to loss of value – but will pay
remediation cost if undertaken
• Insurers generally require assignment of land
claims when rebuilding foundations – but
caution is advised
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