Uninsured drivers face huge crash bills
Converting empty commercial properties into residential dwellings seems an obvious solution to the housing crisis, but Miriam Bell finds it’s not as easy as it sounds.
AA Insurance dealt with about 8000 claims involving at-fault uninsured drivers, and the damage caused adds up to $26 million.
The uninsured drivers were liable for the costs, and in a handful of higher-cost cases, face a decade of debt repayments to the insurer.
AA Insurance said it still had 16 people making repayments on debts they incurred in 2008 when they caused crashes while driving uninsured.
In one case from last year, a young, uninsured driver will be paying off a debt from a crash of over $40,000 at $100 a week for the next eight years.
While that was at the higher end of debts, there were hundreds of crashes of AA Insurance policyholders with uninsured drivers who ended up being pursued by the insurer for the costs of repairing, or replacing damaged vehicles.
Amelia Macandrew, customer relations manager for
AA Insurance, said that last year it handled 320 claims involving uninsured drivers who caused damage in car accidents that cost more to fix than the average fees and costs for a year of tertiary study.
‘‘In 2020, the average fees and costs for a year’s study came to $11,484,’’ Macandrew, said.
‘‘During the same year, the average cost of damage that these uninsured drivers were financially liable for was $19,114 or $6.1 million collectively,’’ she said.
Some individuals ended up owing huge sums.
One young uninsured driver, who lost control of his vehicle in a mall car park, hit an AA Insurance customer’s car, shunting it into a wall, she said.
The car was a write-off, but it was worth $40,600, and the uninsured driver was now paying that debt off at the rate of $100 a week, and would, at that rate, be making repayments for the next eight years.
One woman in her 30s, who
caused a crash by crossing the centre line, was repaying a debt of $23,300 at $50 a week for the next nine years.
Uninsured drivers were legally liable for the damage they caused to the cars of other drivers, McAndrew said, and the costs could be ‘‘a life-changer’’.
Insurers had staff dedicated to collecting the money, and could arrange long-term repayment plans where necessary, she said.
Uninsured drivers had no say in how, or where, cars they damaged were repaired by insurers.
Macandrew said insurers’ focus was on safe repairs done through trusted repairers.
Uninsured drivers who wanted to challenge the amount they were charged would have to seek legal advice.
Macandrew said AA Insurance market research indicated most drivers had experienced an accident at some point in their driving careers.
In all, 63 per cent of drivers had had an accident, and 65 per cent of those had at least one accident before the age of 30.
AA Insurance’s research indicated about a third of young drivers didn’t consider their car worth insuring, but Macandrew urged them to at least get third party insurance, which covers damage to other people’s cars and property.
Macandrew urged all students with cars to at least take out third party cover.
Online money research website Moneyhub said third party car insurance cost about $150 a year.
Founder Christopher Walsh said that ‘‘unlike other countries, it is perfectly legal to drive a car in New Zealand without insurance’’.
‘‘But if you cause an accident and damage another vehicle or property, you are personally liable.
’’With third party insurance available at around $150 per year, it is a sensible choice to protect yourself and the general public.’’
New Zealand MPs have considered making car insurance compulsory, but decided against it.
In the wake of Covid-19, office environments have changed. Globally, workers have embraced remote, and flexible, working arrangements and vast numbers of them have decided not to return to their former workspaces.
New Zealand has not been exempt from this trend, and that’s having an impact on the use of office space.
A recent Colliers report on nine core Asia Pacific cities, including Auckland, forecast that office vacancy rates will peak around late next year at about 14 per cent, although it indicates this peak may occur slightly earlier in Auckland and reach only around 11 per cent.
Last year, business management consultancy Meta5 predicted office space could reduce by as much as 50 per cent, and market research by property adviser company TwentyTwo showed 42 per cent of respondents intended to reduce, sublet, eliminate, or relocate from their existing offices.
The upshot is many office blocks and commercial properties are under-utilised, or even vacant, around the country, particularly in the CBDs of the big cities.
That has led to growing calls for those spaces to be converted, or repurposed, into residential dwellings. And those calls are becoming more urgent as runaway house prices highlight the country’s chronic housing shortage.
The conversion of offices into residential dwellings is wellestablished in the United States, and it’s been a growing trend for some time in the United Kingdom, Europe and Australia. Some high-profile examples include the Woolworth Building in New York and the Delta Point development in London.
Office conversion has been slower to catch on here, although in Auckland, the former Auckland Council office building next to Aotea Square is being converted into a luxury apartment precinct.
A prominent example in Wellington follows a different model.Te Ka¯ inga Aroha apartments are a joint project between Wellington Council and The Wellington Company, which
converted office space in the former Freemasons building into apartments for rent.
Colliers national director of residential projects Pete Evans says office space conversion does have the makings of a trend but it’s not as easy or as commercially viable as many people think because there are significant differences between space designed for working and space designed for living.
Any conversion needs to take into account design, the divvying up of floor plates, frontage and outlook, air and light provision, seismic upgrades, consenting issues and safety requirements.
‘‘The costs of doing this add up quickly, so you’d be looking at about $4000 a square metre to carry out a decent conversion,’’ Evans says.
‘‘But you might have an empty site next door where a developer could start from scratch and build a brand new, high-end apartment block for about $6000 a sqm.
‘‘So the conversion might cost a bit less, but not much and there’s fewer issues with a new build as it’s easier when you start with a clean slate.’’
At the same time, if a developer was to build some new townhouses or terraced housing on the city fringes or suburbs, that would cost about $2000 a sqm, making it a more appealing option for developers.
Evans also believes city fringes are on the rise as work and lifestyle hubs, and that will affect where developers opt to build.
He says there have been some interesting office conversions in Auckland and that we may see more of them in smaller commercial buildings in fringe suburbs like Ponsonby, Parnell and Mt Eden.
Veteran property developer Ian Cassels, from The Wellington Company, is a passionate advocate of office conversion and says there is scope for many more such projects in Wellington and Auckland.
One of the issues is that most commercial property owners don’t want to be residential landlords, he says. ‘‘They want a reliable cheque every month without the complexities that come with residential tenants. That story is changing, though,
and good commercial propositions are growing harder to find.’’
In contrast, people always need a place to live which makes residential property a more consistent and stable option. Commercial landlords might not be keen to embrace that and convert their properties now, Cassels says.
‘‘But, in the end, everything is driven by financial concerns and goals and the direction of the market. A change in mindset will come and more conversions will happen.’’
He believes it’s a good thing if a developer has the stomach, perseverance and resources for conversion, because repurposing empty buildings and encouraging inner-city living has significant benefits for the community.
‘‘It enables the provision of more affordable housing options, assists the regeneration of the central city and contributes to New Zealand’s attempt to become more sustainable by cutting down on car use.’’
Cassels currently has three more Te Ka¯ inga Aroha-style projects under way with Wellington Council and he’s also turning Television New Zealand’s former Avalon hub in Lower Hutt into apartments.
While there are hints of a trend bubbling away in Wellington, office conversion is currently more of a trendy idea than an actuality in most places.
Prendos senior building surveyor Leon Goodwin is yet to
see an upswing in direct engagement from commercial property owners on conversion projects, but the ingredients are there for that to change.
‘‘Many councils, particularly in the bigger cities, have made it clear they are behind greater intensification of residential housing,’’ Goodwin says. ‘‘If the shift to remote working continues and vacancy rates grow post-Covid, that could push a lot of currently uncertain office property owners off the fence.’’
If the shift to remote working continues and vacancy rates grow post-Covid, that could push a lot of currently uncertain office property owners off the fence. Leon Goodwin Prendos senior building surveyor
If that happens, repurposing office space into residential dwellings could be a good strategy to retain value, but there are some key considerations for anyone thinking about doing so, he says.
‘‘They’ll need to assess whether the space actually allows for a quality living environment, one that is desirable to potential residents and yields a profit.
‘‘Careful consideration must be given to natural light, adequate ventilation, quality finishes and whether there is the room required to provide decentsized living spaces. To realise the greatest profit, they will have to assess the potential of the building and the site.’’
It’s a different way of thinking and one that doesn’t seem to have become widespread yet, Goodwin adds. ‘‘So it’s a matter of ‘wait and see’ when it comes to office conversion but we’d be keen to see increased action on that front in future.’’