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Cash settlement

The Earthquake Commission Act 1993 (EQC Act) allows EQC to settle building claims by cash payments, or by repairing or replacing earthquake damaged buildings.

Outside of Canterbury, EQC settles almost all claims by making cash payments. In Canterbury, building claims of between $15,000 + GST and $100,000 + GST are generally referred to the Canterbury Home Repair Programme (CHRP).

In Canterbury, there have been many situations where EQC has chosen to make a cash payment rather than a repair including, but not limited to, the following:

  • Claims less than $15,000
    Where the value of the work required to repair or replace the damaged building is less than $15,000+GST;
  • Issues unrelated to earthquake damage
    Where significant, pre-existing building issues unrelated to earthquake damage should sensibly be addressed at the same time as the earthquake damage covered by EQC. This includes situations where:
    • EQC considers that building design or construction features indicate an increased likelihood that other works may be required unrelated to the repair of the earthquake damage covered by EQC;
    • there is significant deferred maintenance; or
    • issues are discovered after an EQC repair has started;
  • Owner’s requirements
    Where it is not possible or practicable for EQC to complete timely or cost-effective earthquake damage repairs because of:
    • other work that has been, or is going to be, done to the building, by the owner (or their private insurer); or
    • circumstances where an owner makes completing the work too difficult (for example, by restricting access to the building);
  • Health and safety concerns
    Where earthquake damage repair work would expose EQC staff or contractors to unacceptable health and safety risks; and
  • Earlier cash settlement not repaid
    Where building damage occurs in two or more earthquake events and:
    • the initial damage was cash settled;
    • the initial damage has not yet been repaired;
    • the additional damage from the subsequent event means that any EQC managed repair must address the damage from both earthquake events; and
    • the owner decides not to repay the initial cash settlement for EQC to use in repairing the earthquake damage.

In this latter situation customers can usually opt-in to CHRP by repaying the initial cash settlement.

Calculating and communicating the cash settlement

Cash settlement is not a cheaper option for EQC than a CHRP managed repair. In each case the amount is based on local contractor rates and includes a consideration for project management and any required site preparation, such as testing.

Customer concerns about the settlement amount

A review process is available for customers unhappy with their settlement amount. If a customer can provide appropriate evidence to show that EQC’s settlement was not enough to repair the earthquake damage covered by EQC then EQC will review the claim. This includes situations where more earthquake damage is found while the repairs are being carried out. Where more damage is found, the customer should notify EQC immediately and stop work until EQC has had an opportunity to inspect the additional damage.

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