Insurer denies deceiving couple over quake claim
A Canterbury earthquake insurance case that may be the trendsetter for thousands more is with the Court of Appeal.
Southern Response is appealing against a decision that it misrepresented rebuild costs Alison and Karl Dodds could have been entitled to under their full replacement cover policy.
The Dodds’ Warren and Mahoney-designed home in Huntsbury, Christchurch, was deemed uneconomic to repair after it was damaged in the February 2011 earthquake.
On the information they had at the time, the Dodds chose to settle their claim for $894,937, including the EQC component, and they bought elsewhere.
After the settlement, the Dodds discovered Southern Response had not shown them a full list of expenses it would have met if the couple chose to rebuild on the same site, including demolition and professional fees, which would have brought the total up to $1,186,920.75.
The Dodds sued Southern Response, and a judge in the High Court found it had misrepresented what they could get under their policy. He awarded them $178,894.30 plus GST.
Southern Response is the governmentowned company responsible for settling claims by AMI policyholders for Canterbury earthquake damage that occurred before April 5, 2012.
The Dodds’ case is expected to influence about 3000 other claims, although not solve them because of the variation in circumstances.
At the Court of Appeal in Wellington yesterday, Southern Response’s lawyer, Tom Weston, QC, said his client had made an ‘‘innocent misrepresentation’’ that had been wrongly portrayed as a ‘‘deception’’.
Some amounts were omitted from the list of options payable under the Dodds’ policy because they were expenses Southern Response would meet for a rebuild on the same site but would not have been available to the Dodds under any of the other options.
Other clients had seen that certain costs were not included in their entitlement options and had asked for clarification but the Dodds didn’t, Weston said.
The Dodds were given a list of options based on the company’s assessment of their entitlement under their policy, and it was suggested they take advice, which they did.
The entitlements were negotiable, Weston said.
‘‘They did not just say, ‘take our word for it’. Ultimately they were saying, ‘this is your call’,’’ Weston said.
But the lawyer for the Dodds, Neil Campbell, QC, said Southern Response had at first given customers a full list of estimated costs of a rebuild on the same site but at some point it stopped providing them, apparently because Southern Response thought it confused customers into thinking they were entitled to those amounts.
Instead, Southern Response gave the Dodds an abridged estimate for rebuilding their house when, in fact, it had a different estimate that it did not give them, Campbell said.
Nowhere did Southern Response explain it had excluded some rebuilding costs or that there was another report, he said.
The Court of Appeal hearing is expected to finish today.