Land claims

The Canterbury earthquake sequence taught us that some land damage is visible, such as cracking and undulation (where the land has moved in an up-and-down movement resulting in a wavy shape). But other damage can be more complex and not as easy to see, such as Increased Flooding Vulnerability (IFV) and Increased Liquefaction Vulnerability (ILV). The Canterbury events marks the first time anywhere in the world that these types of land damage have been recognised as insured damage.

Additionally some land claims are more complex because of structures or shared ownership.

The information provided on this webpage is specific to the Canterbury events and in accordance with the detailed provisions of the Earthquake Commission (EQC) Act 1993 current at the time.

  • Questions and Answers (Q&As) about Increased Flooding Vulnerability

    This section includes Q&As on the following topics:

    Qualification for Increased Flooding Vulnerability (IFV)

    What are the thresholds for IFV?

    A property will only qualify for IFV where subsidence to the insured land has caused it to become more vulnerable to flooding as a result of the Canterbury earthquakes. If a property was already prone to flooding prior to the earthquake, and the flooding vulnerability has not changed, then it will not qualify.

    To determine whether the insured land has potential IFV damage, the following thresholds are applied:

    1. The flood depth has increased by 0.2m or more as a result of the Canterbury earthquakes;

    2. The flood depth has increased by 0.1m or more as a result of a single earthquake;

    3. The land has suffered observed damage as a result of the Canterbury earthquakes; and

    4. The increase in flooding vulnerability has impacted on the market value of the property.

    There are some exceptions to having to meet all the thresholds. See the following Q&A.

    What if my property only meets some of the IFV engineering thresholds?

    While EQC believes that the engineering thresholds (1-3 in the above Q&A) adopted will identify most properties with IFV damage, it recognises that some of these thresholds may exclude properties which have actually suffered IFV. Accordingly, the following exceptions have been created:

    • Properties that meet thresholds 1 and 3 but do not meet threshold 2 (i.e. exacerbated flood depth has increased by 0.2m or more across the sequence, but there is no single event where change is greater than 0.1m);

    • Properties that meet thresholds 1 and 2 but do not meet threshold 3 (i.e. meet numerical requirements for exacerbated flood depths but there is no record of visible land damage); and

    • Properties in areas of known tectonic uplift where there is differential subsidence (i.e. where the insured land is in an area where the land has lifted, but it has been shown that the different levels of subsidence within the area have increased the flooding vulnerability).

    Examples of how EQC applies these thresholds and exceptions

     

    Thresholds that have been met

    Relevant Exception

    What is the outcome of EQC’s engineers’ initial assessment?

    Next step

    Property A

    1 and 3 (but not 2)

    Event exception

    This property did not meet all three thresholds.  It only met Thresholds 1 and 3.  But because an exception applies (the Event exception), the property still potentially has IFV.

    Site-specific engineering assessment (see below)

    Property B

    1 and 2 (but not 3)

    Land damage exception

    This property did not meet all three thresholds.  It only met Thresholds 1 and 2.  But because an exception applies (the Land damage exception), the property still potentially has IFV.

    Site-specific engineering assessment (see below)

     

    Property C

    2 and 3 (but not 1)

    No exception applies

    This property did not meet all three thresholds.  It did not meet Threshold 1.  No exception applies.  The property will nevertheless be subject to an area-wide review, and therefore may still be confirmed as potentially having IFV.

    Area-wide review (see below)

    Where the thresholds and the exceptions set out above have been applied and the insured land has been assessed as potentially having IFV, EQC's engineers next carry out a site-specific assessment. EQC’s engineers also carry out an ‘area-wide review’ (examining the patterns of qualification for both qualified and non-qualified properties in an area).

    The valuation threshold (threshold 4 in the above Q&A) is the final step in determining whether the property qualifies for IFV land damage.

    In the end, EQC must form a view on each IFV claim. The primary question is: On evaluating the information available (including any information from the customer), and using relevant and informed expert advice, can EQC properly conclude that the relevant land has suffered IFV?

    Why is some land that is already flooding not receiving an IFV settlement?

    There may be a number of reasons including:

    • IFV damage is where there has been an increased vulnerability to flooding because of the direct result of an earthquake. A property will only qualify for IFV where subsidence to the insured land has caused it to become more vulnerable to flooding. If the insured land was already prone to flooding prior to the earthquake and the vulnerability has not changed, then it won’t qualify for IFV.

    • If the IFV damage is to an area that is outside the land insured by EQC on a property, it will not be covered.

    • EQC does not provide cover for off-site factors. The IFV damage must be as a direct result of the changes to the insured area of land. This will exclude properties where an increase in vulnerability occurs solely, or primarily through off-site factors. Off-site factors can include such things as changes to river heights, narrowing of river banks, shallower river beds and damage to storm water drains.

    If I’m in the Flood Management Area, do I automatically qualify for IFV?

    No. The Christchurch City Council use Flood Management Areas in the City Plan and have mapped the flood risk for a 1-in-200 year flood event (or 1/200 Annual Exceedance Probability (AEP)) for some areas of Christchurch. Being in an identified Flood Management Area or identified flood zone for a 1/200 AEP does not automatically mean that a property might qualify for the IFV land damage category. This is because EQC:

    • considers only increases in flood vulnerability due to subsidence to residential land caused by an earthquake event;

    • assesses damage on the basis of an up to 1/100 Annual Exceedance Probability (i.e. a less severe flood);

    • does not factor in projected climatic changes into modelling, or changes to flooding caused by change to uninsured land (e.g. a change in the flow of a river, or the building or demolition of a stop-bank – these effects are not caused by the damage to the insured land); and

    • does not consider future development or apply a freeboard (or floor level height) in addition to mapped flood depths.

    I understand that Christchurch City Council had a flood modelling issue in New Brighton area. Does this mean assessments for IFV land damage on some properties might be wrong?

    EQC has investigated whether any IFV properties might be impacted by the Christchurch City Council modelling issue and concluded that no properties are impacted by this.

    The models used by EQC to assess IFV land damage are a combination of existing City Council’s flood models and overland flow models which EQC developed. In cases where EQC uses the City Council’s flood models for the assessment of IFV land damage, it applies different criteria than when the Council uses them to assess floor levels in houses.

    The criteria and reports describing EQC’s models used for the assessment of IFV land damage are available here on EQC website.

    What happens after the initial engineering modelling identifies potential IFV properties?

    EQC has undertaken an extensive flood modelling programme to identify the number of properties that may have an increased vulnerability to flooding (potential IFV properties). However these results need to be validated on the ground.

    All potential IFV properties will undergo a site-specific investigation by an engineer and (where engineering review checks are passed) an assessment by a valuer. These steps will:

    • review the accuracy of the model – engineers will visit the property to confirm that the modelled ground levels/subsidence observed by LiDAR (aerial survey techniques) are representative of relative levels on the ground. This can often be achieved by viewing the property from the road.

    • review the location of the exacerbated flooding – IFV has been modelled via 5m x 5m cells across a property. Exacerbated flooding levels will indicate the change in flood depth for each of these cells and a property will provisionally qualify for IFV if any one of these cells meets IFV qualification thresholds. Engineers and valuers will review the location of these qualifying cells to assess the practical impact of this change in relation to the high-level IFV qualification principles.

    • assess whether the exacerbated flooding will cause a loss in value to the property – valuers will assess the location, size and frequency of any exacerbated flooding to determine if this change impacts the market value of the property.

    EQC’s engineers will then carry out an area-wide review (examining the patterns for qualification for both qualified/non-qualified properties in an area). At the end of this review process, a property will either be confirmed as qualifying or not qualifying for IFV land damage.

    I didn’t receive an IFV potential qualification letter – does this mean I don’t have IFV damage?

    Yes, if you haven’t received an IFV potential qualification letter you are unlikely to have IFV land damage. Customers who received an IFV potential qualification letter in 2014  provisionally met the IFV qualification criteria (or exception criteria) based on initial modelling.

    All potential IFV properties underwent a site-specific investigation by EQC's engineers. Additionally, engineers conducted an area-wide review of all qualifying and non-qualifying properties to review the appropriateness of the qualification status. This review included consideration of the following:

    • Spatial anomalies – this will consider cases where a pattern of qualification presents a spatial anomaly (e.g. one non-qualifying property in a street).  Anomalies may present situations where the flood modelling is under/over representing flood levels for a property;

    • Frequency anomalies – for qualification modelling, EQC has adopted a 1% Annual Exceedance Probability (AEP) rainfall event (i.e. an event which has a 1% chance of being exceeded in any one year). However, in some geographical locations analysis at a higher frequency event (2% or 10% AEP, e.g. a lower volume event) may show a more significant change which meets the thresholds. Vulnerability at these higher frequencies will also be considered;

    • Other – properties that have between 0.1m and 0.2m of exacerbated flood depth across the earthquake sequence.

    Why have some people who were told their properties were potential IFV not received IFV settlements?

    This could happen for two reasons:

    • It doesn’t qualify under engineering assessments. A closer, site-specific engineering site assessment or area-wide review could show that the property has not suffered IFV, even though it may meet some or all of the initial engineering thresholds.

    • EQC’s valuers may determine that the increase in flooding vulnerability did not impact the market value of the property. In that case, the property will not qualify for IFV land damage. This valuation judgement will take into account factors such as the likely location, depth and frequency of increased future flooding.

    How would a site-specific assessment show that a property that was potential IFV does not qualify for this type of land damage?

    The potential IFV properties were identified by modelling 5m x 5m cells across a property. A property will qualify for a site-specific assessment if any one of these cells meets the initial Increased Flooding Vulnerability thresholds or falls within the various exceptions.

    The site-specific assessment could then find that, for example:

    • The increased risk of flooding is in fact unlikely to occur within the area of EQC insured land. For example, the slope of the land or a retaining wall may mean that the water will not flow onto the EQC insured land.

    • There is an error in the topographical information gathered in the initial LiDAR surveys. These surveys involved the scanning of the ground surface from an aircraft after each major earthquake to assess changes in ground height. The LiDAR surveys can give rise to inaccurate measurements for a number of reasons, such as the presence of a swimming pool on a property. This is why we have also carried out site-specific reviews of each property.

    Once the site-specific assessment has been completed, an area-wide review (the final engineering review) is carried out. The purpose of this review is to see whether there are any properties in the area that have been inappropriately assessed. As a result, even if a property has been previously assessed as not having IFV land damage, it will be assessed again for consistency with neighbouring properties and areas.

    Did EQC go to every potential IFV property to confirm whether or not it has that type of damage?

    Yes. EQC's engineers assessed areas where properties had been identified as having potential IFV to confirm whether or not properties in the area had potential IFVed. Most assessments were made from the road (e.g. where exacerbated flooding occurred on the road-side area of the property) while a small proportion required physical access to the property. Where access to the property was required, EQC contacted the customer to arrange a time to enter the property. If the property met the criteria under the engineering assessment, then the valuation assessment followed.

    When will I find out whether my property qualifies for an IFV settlement?

    EQC expects outstanding IFV settlement packs to be out sent out in 2017. It’s taking time as these are complex claims and our focus is on the quality of the information customers receive so that they can have confidence our decisions are based on sound and robust engineering and valuation assessments.

    Declaratory Judgment

    Why did EQC ask the Court for a Declaratory Judgment regarding its IFV Policy?

    EQC asked in October 2014 for a Declaratory Judgment from the High Court to confirm its IFV settlement approach, so customers can be confident their settlements are soundly based.

    The Declaratory Judgment was delivered in December 2014 and confirmed that IFV is a form of land damage and Diminution of Value (DOV) is a lawful settlement option. See the Diminution of Value (DOV) due to Increased Flooding Vulnerability (IFV) land damage (for where the house is still in place) fact sheet and Diminution of Value (DOV) due to Increased Flooding Vulnerability (IFV) land damage (for where the house has been or will be rebuilt) fact sheet for more information.

    Settlement of claims for IFV land damage

    How are you going to settle properties confirmed as having IFV?

    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). There are different approaches for DOV assessments which depend on whether or not the house on a property before the 2010-2011 earthquakes remains in place. For more information see these questions and answers.

    Where a property with IFV has been sold since the earthquakes, the settlement will also be on the basis of DOV.

    What is Diminution of Value (DOV) in relation to IFV?

    DOV is a settlement method that EQC will use, for example, for properties with IFV where a repair of that land damage may not be legal or feasible to carry out. The settlement is based on the long-term loss of market value of the insured land (and associated residential buildings in the case where the house on a property before the 2010-2011 earthquakes remains in place and is not to be rebuilt) due to the IFV damage.

    Where a property with IFV has been sold since the earthquakes, the settlement will also be on the basis of DOV.

    As part of the Declaratory Judgment, EQC asked the High Court whether this settlement method is permitted under the EQC Act. The Declaratory Judgment delivered in December 2014 confirmed that EQC is able to settle IFV land damage by paying the amount of DOV in appropriate cases.

    What are the criteria for feasibility and consentability in regards to land damage repair?

    Putting this question in context, the IFV and/or ILV Land Damage Consolidated Policy Statement outlines several situations in which a settlement of IFV land damage will be based on DOV rather than the cost of the repair. These situations include the following:

    • If the residential building has to be removed in order to enable repairs to the land to address the IFV land damage (e.g. where the damage is on the house footprint);

    • If a resource consent is required under the Resource Management Act to enable repairs to the land to address the IFV damage. 

    However, if the customer can show that they can in fact obtain a resource consent for the land repair (i.e. that it is consentable) and that they will carry out the land repair (i.e. that the repair is feasible and will be done), then the settlement amount may be amended to be based on cost of repair. This is unless the cost of repair is disproportionate to the amount of the DOV. This comparison will be determined on a case by case basis.

    The High Court Declaratory Judgment has concluded that these terms of the EQC IFV Policy are consistent with EQC’s obligations under Earthquake Commission Act.

    All settlement amounts are subject to the land cover cap amount which is set out in section 19 of the Earthquake Commission Act. The EQC land cover cap is generally the value of the area of damaged land or the value of a parcel of land that is the minimum lot size under the relevant District Plan, whichever is the smaller.

    Why is there no indexing of the DOV assessments to reflect the increase in property market valuations in general in the Christchurch market in the last five years? 

    When doing the DOV assessment, EQC starts by assessing:

    • in the case of a property where the house that was on the property before the 2010-2011 earthquakes is still in place and is not to be rebuilt, the market value of the insured land and the associated residential buildings, such as the house, garage and garden shed;

    • in the case of a property where the house that was on the property before the 2010-2011 earthquakes has been or will be rebuilt on the property, the market value of the insured land only.

    In each case, that market value is assessed immediately before the earthquakes (3 September 2010). EQC then uses this value as the base for calculating the reduction in value (DOV) that has occurred since that date as the direct result of the IFV damage caused by the earthquakes.

    In accordance with the Earthquake Commission Act, EQC assesses the base land value from the date immediately before the damage occurred. There is no scope under the Act to choose a base value as at a future date (i.e. after the date of the damage), or somehow apply an index to increase the amount of the base value.

    EQC has assessed the base valuation as at 3 September 2010 for all the earthquakes that have caused the IFV damage. This is to ensure that the base valuation is a fair market valuation and is not distorted by the effects of the earthquakes on the property market since 3 September 2010.

    I want to get a copy of the map that shows all properties that have been assessed for IFV and have been confirmed as having or not having IFV land damage.

    Here you can download a map that shows all potential IFV properties that have been assessed for IFV so far.

    Why is it taking so long to confirm IFV?

    It is the first time anywhere in the world that IFV land claims have been recognised and are being settled. A huge amount of flood modelling and analysis by engineers and assessments by valuers has been undertaken to enable EQC to assess and settle IFV claims.

    EQC also tested its proposed approach by seeking a Declaratory Judgment from the High Court to confirm that IFV was a form of natural disaster damage under the EQC Act, and that DOV is an appropriate form of settlement in certain situations. This was so that EQC customers could be confident their IFV settlements are soundly based.

    What happens if I have already had a settlement for land damage or was told I would not receive a payout for land damage?

    This previous settlement related to visible land damage only (such as cracking or undulation), and you may receive an additional settlement should your land be confirmed as having IFV damage. At the time the settlements for visible land damage were made, EQC was unable to confirm which properties had potentially suffered IFV damage.

    I’ve received my new rating valuation and the value of my land has dropped. Why isn’t my EQC land settlement for the amount of the drop?

    EQC’s valuers determine the loss of market value due to the IFV damage. EQC cannot use changes in ratings valuations by themselves to determine its EQC land settlements. Rating valuations are undertaken by local councils every three years to reflect all factors affecting a property’s value, not just earthquake damage. EQC does not cover any loss of value that the property may have suffered for other reasons, which do not arise from earthquake damage to the property.

    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 up to the EQC cap. The EQC cap is generally the value of the area of damaged land or the value of a parcel of land that is the minimum lot size under the relevant District Plan, whichever is the smaller.

    Payment of the cost to reinstate will enable you to return your land to its undamaged state, which will also remedy any loss of value due to earthquake damage.

    However, for some types of land damage it will not always be possible to identify a repair method to the land which is feasible and able to be carried out legally. This is most likely to be in cases where the property has suffered complex land damage like IFV. In these cases EQC may elect to settle by paying a customer the long-term loss of market value that the property has suffered as the direct result of the additional vulnerability that the property now has to flooding as a result of the earthquake damage to the property.

    What happens if I am still waiting for my earthquake settlement and I have experienced further damage by flood?

    EQC covers earthquake damage to your house. Your private insurer would normally cover flood damage to your house. The settlement amount that EQC will pay will generally be for the earthquake-related damage only and not for flood damage.

    Can my house be repaired within the Canterbury Home Repair Programme (CHRP) if I’m still waiting to get my land confirmed as having IFV?

    EQC has given homeowners who are within the Canterbury Home Repair Programme (CHRP) and identified as potential IFV a choice about whether they would like to:

    • have their property repaired through the repair programme ahead of the confirmation of their land damage;

    • receive a cash settlement and manage their own repairs; or

    • be placed on hold within the CHRP programme until such time as their land damage has been confirmed and they can make a more informed choice.

    For those CHRP customers who asked to have their repairs to be put on hold, we will be back in touch to discuss your dwelling repair once your Increased Flooding Vulnerability status is confirmed.

    How is EQC deciding on whether to raise floor levels in my house?

    If EQC is repairing earthquake damage to the building, it is required to complete a lawful repair. Where there is a resource management requirement or a building consent requirement which applies to the building repair, we will complete all work that is needed – including raising the floor level of the building if that is a requirement. Where the building repair does not legally require the floor level to be raised, then EQC does not pay for or undertake this work.

    Why doesn’t EQC pay for homes to be raised so they don’t flood in future?

    The High Court in its Declaratory Judgment confirmed that IFV is a form of land damage and not building damage. Raising the floor level of a house is not a method of compensation for IFV land damage available to EQC under the EQC Act. Raising floors does not repair the physical change to land that has caused its increase in vulnerability to flooding, nor stop the water from coming onto the customer’s land.

    If it could, EQC would prefer to settle claims for IFV land damage by providing a cash payment based on the amount it would cost to repair or reinstate the land. However, where it is not possible to identify a repair method for the land which is feasible or able to be done legally, EQC is basing the settlement of Increased Flooding Vulnerability land damage on the DOV of the property. This method of settlement is consistent with the Declaratory Judgment delivered by the High Court.

    Should the customer wish, they may themselves apply their cash settlement payment for IFV land damage towards raising the floor level of the house.

    Is there an excess for the IFV land payments?

    Each claim for IFV land damage is subject to the excess applied to EQC’s land settlements. If the total amount of the land claim for a specific event is $5,000 or less, EQC will deduct an excess of $500. If the claim is greater than $5,000, EQC will deduct an excess of 10 percent up to a maximum of $5,000 per claim. Details of the excess deducted for each claim will be set out in the customer’s Land Settlement Summary.

    What do I have to do with the settlement amount calculated on the basis of DOV?

    A DOV settlement amount is paid for example where there is no feasible repair available for the IFV land damage, or because the repair is not able to be done legally. While a customer may wish to use the settlement amount to mitigate the effects of any future flooding, there is no requirement to do so.

    If customers do not use the DOV settlement amount to repair the IFV damage, it will not affect future EQC cover for the property.

    Depending on how much the settlement amount is, it may be paid to the customer's mortgage provider of the property.

    Will a property be insurable if the customers get confirmed that their land has IFV damage?

    In general, if the customer has valid fire insurance with a private insurer then the property is covered by EQC. A customer should discuss with their private insurer whether their future insurance is impacted by the land being confirmed as having suffered IFV damage.

    Will flooding information go on my LIM?

    EQC does not decide what information goes on the LIM. This is a question for local authorities.

    Do some properties have both IFV and ILV land damage and if so when will they be settled?

    EQC began making settlements for customers with both IFV and ILV land damage in September 2016. It is likely these settlements will continue for the remainder of 2016 and early 2017.

    Review process

    I disagree with my IFV settlement decision – how can I get it reviewed?

    Information about the review process is available on the Increased Flooding Vulnerability main page.

    What is the length of time EQC customers have to challenge a settlement for a claim made under the EQC Act?

    See here for more information on limitation legislation.

    Increased Flooding Vulnerability Policy

    What is the Increased Flooding Vulnerability policy?

    The IFV and/or ILV Land Damage Consolidated Policy Statement outlines the way that EQC will approach the assessment of IFV and how EQC will settle claims for IFV land damage.

    Increased Flooding Vulnerability land damage on properties where the house has been or will be rebuilt

    What does “has been or will be rebuilt” mean?

    For IFV land damage assessment purposes, EQC considers that the house on a property “has been or will be rebuilt” where either:

    • the insured land on the property is currently a vacant site; or  

    • the house that was on the property before the 2010-2011 Canterbury earthquakes:

      • currently remains on the property but is intended to be rebuilt on the property; or

      • is currently being rebuilt on the property; or 

      • has already been rebuilt on the property. 

    How do you determine that a customer intends to rebuild their house on the property?

    EQC determines the customer’s intent by taking into account relevant information, such as for example, statements made by the customer and/or their private insurer, and consent information obtained from the local authority.

    How would the DOV assessment as a result of IFV land damage be different if the house that was on the property before the 2010-2011 earthquakes remains in place and is not to be rebuilt?

    In that case, the DOV assessment would be based on a different valuation methodology, which is used where the house that was on the property before the 2010-2011 earthquakes remains in place and is not to be rebuilt. The DOV would apply to the insured land and the associated residential buildings, such as the house, garage and garden shed. See IFV DOV methodology (relevant for where the house remains in place and is not to be rebuilt).

    By contrast, where the house has been or will be rebuilt, EQC’s valuers use a valuation methodology developed for that situation. The DOV reflects the loss of value of the insured land only. The assessment of the DOV takes into account the impact of IFV land damage on the future use of the insured land, including as a building platform for a house. See Diminution of Value Methodology for Increased Flooding Vulnerability (for where the residential building has been or will be rebuilt) (October 2016).

    Why is DOV assessed differently for IFV properties where the house that was on the property before the 2010-2011 earthquakes has been or will be rebuilt (as compared to where the house remains in place and is not to be rebuilt)?

    For properties where the house remains in place and is not to be rebuilt, the customer has a damaged asset (insured land) that is associated with a house that will stay on the land. The reduction in market value (DOV) will apply to the insured land as well as the house as a result of the IFV land damage. 

    However, where the house has been or will be rebuilt, the pre-earthquake house no longer is, or will be, associated with the insured land. In this case, DOV cannot be assessed by reference to the pre-earthquake house as it will be replaced by a house that may have different characteristics and value. The potential characteristics and value of a new house will be reflected in the value of the insured land. The DOV will therefore be assessed for the insured land value only. This DOV assessment will take into account the likely impact of the IFV land damage once a new house is rebuilt.

    Increased Flooding Vulnerability (IFV) of Unit Title Developments

    Settlement of claims for IFV land damage

    How is EQC settling properties that are Unit Title Development and are confirmed as having IFV?

    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 (including unit title developments) with IFV land damage 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).

    As part of the Declaratory Judgment, EQC asked the High Court whether the use of DOV as a settlement method is permitted under the EQC Act. The Declaratory Judgment delivered in December 2014 confirmed that EQC is able to settle IFV land damage by paying the amount of DOV in appropriate cases.

    You can find out more by reading the Increased Flooding Vulnerability for unit title developments fact sheet.

    What are the criteria for feasibility and consentability in regards to land damage repair?

    The IFV and/or ILV Land Damage Consolidated Policy Statement outlines several situations in which a settlement of IFV land damage will be based on DOV rather than the cost of the repair. These situations include the following:

    • If the residential building(s) have to be removed in order to enable repairs to the land to address the IFV (e.g. where the damage is on the units’ footprint);

    • If a resource consent is required under the Resource Management Act to enable repairs to the land to address the IFV damage.

    However, if the Body Corporate can show that it can in fact obtain a resource consent for the land repair (i.e. that it is consentable) and that it will carry out the land repair (i.e. that the repair is feasible and will be done), then the settlement amount may be amended to be based on cost of repair. This is unless the cost of repair is disproportionate to the amount of the DOV. This comparison will be determined on a case by case basis.

    This settlement approach is consistent with the Declaratory Judgment.

    All settlement amounts are subject to the land cover cap amount which is set out in section 19 of the Earthquake Commission Act. The EQC land cover cap is generally the value of the area of damaged land or the value of a parcel of land that is the minimum lot size under the relevant District Plan, whichever is the smaller.

    How does EQC work out the DOV for each unit?

    EQC starts by assessing the market value of the principal unit and any accessory unit(s) (together referred to here as a “unit”) immediately before the earthquakes (3 September 2010). EQC then uses this value as the base for calculating the market reduction in value (DOV) of the unit that has occurred since that date as the direct result of the IFV land damage caused by the Canterbury earthquakes 2010-2011.

    In accordance with the Earthquake Commission Act, EQC assesses the base value from the date immediately before the damage occurred. There is no scope under the Act to choose a base value as at a future date i.e. after the date of the damage.

    EQC has assessed the base valuation as at 3 September 2010 for all the earthquakes that have caused the IFV land damage. This is to ensure that the base valuation is a fair market valuation and is not distorted by the effects of the earthquakes on the property market since 3 September 2010.

    You can find out more by reading the Diminution of Value (DOV) due to Increased Flooding Vulnerability (IFV) land damage - Unit Title Developments fact sheet.

    How does EQC work out the DOV for common property, for example, foyer of the building, lifts?

    The DOV has been assessed by EQC’s valuers on a unit by unit basis. The impact of the IFV land damage on common property of a unit title development has been taken into account in determining the loss of value to each unit caused by the IFV land damage.

    Why are the DOVs for each unit different?

    The DOV for units on the same unit title development are usually different. This is because the impact of IFV on the use and amenity of each individual unit varies. For example, in a two-unit development, where the area of IFV land damage is at the rear of the property and does not affect the front unit at all, the front unit may have no DOV, whereas the rear unit may have DOV. The same is true in larger developments as the impact of IFV land damage may vary from unit to unit.

    How can a DOV for one unit in the building be zero if other units in the building are assessed as having a reduction in market value (DOV) as a result of IFV land damage? Will the values of all units not be affected if some values drop?

    EQC’s valuers assess the impact of ILV land damage on each individual unit. This is consistent with the approach to standalone properties. Some houses in a street will qualify for IFV land damage and be assessed as having a reduction in market value (DOV), whereas other houses will not have IFV land damage.

    Why are payments for IFV, and other land damage, made to the Body Corporate?

    The Body Corporate holds the insurance policy in respect of the residential building and land, and has obligations around the use of insurance proceeds that it receives.  

    Can I as a unit owner get information about IFV settlement, including the settlement pack from EQC, given that the Body Corporate is the claimant?

    EQC provides information to the Body Corporate because they are the entity that holds the insurance policy. However, unit owners can ask the Body Corporate to nominate them as a contact point so they can talk directly to EQC. The Body Corporate does this by calling or emailing EQC to nominate the unit owner/s as an alternative contact.

    What should the Body Corporate do with the IFV DOV payment and any other land damage payments?

    A DOV settlement amount is paid, for example, where there is no feasible repair available for the IFV land damage, or because the repair is not able to be done legally.

    The Body Corporate must determine how it wishes to use and allocate the settlement. However, the information provided in the settlement letter includes a breakdown of the IFV settlement amount on a unit by unit basis prior to any excess deduction. This breakdown may assist in deciding how to distribute the payment to the unit owners, if the Body Corporate resolves to do so.

    If the Body Corporate, or the individual unit owners, do not use the DOV settlement amount to repair the IFV land damage, it will not affect future EQC cover for the property.

    On the other hand, it is important that the cost of repair payment related to visible land damage, including damage to retaining walls, bridges and culverts, as well as land cracks, undulation, ponding or silt removal, is used for repair of damaged property. A Body Corporate’s future entitlement to EQC cover may be affected if the payment related to visible land damage is not used for this purpose.

    If the Body Corporate is unsure of what it should do with land damage payments, then it may wish to seek legal advice. 

    Is the Body Corporate allowed to hold onto all the settlement money?

    All unit owners are members of the Body Corporate and are generally entitled to a say in how the settlement money is applied. It is most likely that the Body Corporate chairperson would call a general meeting at which a special resolution is made as to how the money will be applied. EQC has no say in how this money is allocated by the Body Corporate.

     

    Claim Process

    How can I review the qualification decision and/or the settlement amount?

    The Body Corporate can ask EQC to review its qualification decision and/or the settlement amount. Unit owners can request a review through the Body Corporate, or they can be nominated by the Body Corporate to ask for a review themselves.

    EQC will carry out a review when the Body Corporate or its nominated representative(s) provides EQC with new information or a different interpretation regarding these decisions. To trigger a review, information may be provided about, for example:

    • the change in flood depths the property has experienced since the earthquakes; or

    • whether the Body Corporate is going to obtain a consent to repair the IFV land damage.

    To ask for a review, please email us at info@eqc.govt.nz or call on 0800 326 243 between the hours of 7am to 9pm, Monday to Friday, and 8am to 6pm on Saturday.

    What if a customer whose settlement for IFV land damage was based on DOV, believes their land can be repaired?

    If a customer can show that they can in fact obtain a resource consent for the land repair and that they will in fact do the land repair, then the settlement amount may be changed to be based on repair cost. This is unless the repair cost is disproportionate to the amount of the DOV. This comparison will be determined on a case by case basis.

    Where a property with IFV land damage has been sold since the earthquakes, the settlement will also be based on the DOV. This settlement approach for IFV land damage is consistent with the Declaratory Judgment which was delivered in December 2014.

    Settlement amounts are also subject to the land cover cap amount which is set out in section 19 of the Earthquake Commission Act (EQC Act). The EQC land cover cap is generally the value of the area of damaged land or the value of a parcel of land that is the minimum lot size under the relevant District Plan, whichever is the smaller.

     

    Return to the Increased Flooding Vulnerability page

  • ILV - Q&As

    Questions and answers (Q&As) about Increased Liquefaction Vulnerability (ILV) land damage.
    For general information vist the ILV Claims Update page.

    This section includes Q&As on the following topics:

    Qualification for Increased Liquefaction Vulnerability

    How does a property qualify for ILV land damage?

    To qualify for ILV land damage, a property must meet three criteria:

    1. the insured land has material vulnerability to liquefaction damage after the Canterbury earthquakes; and

    2. the vulnerability to liquefaction damage of the insured land in future earthquakes has materially increased as a result of ground surface subsidence of the land caused by the Canterbury earthquakes; and

    3. the increase in liquefaction vulnerability has caused a reduction in the market value of the property (i.e. of the insured land and relevant associated residential buildings combined).

    The first two criteria, which are the engineering criteria, are assessed at up to 100 year levels of earthquake shaking, or in other words, at the levels of shaking which on average are expected to occur at least once in every 100 years.

    My property experienced liquefaction during the earthquakes. Does this mean my property qualifies for ILV?

    Not necessarily. It is possible a property experienced significant liquefaction induced damage as a result of an earthquake but does not qualify for ILV. This could be because, for example:

    • the land is not materially vulnerable to damaging liquefaction in at up to 100 year levels of earthquake shaking; or

    • the land is materially vulnerable to damaging liquefaction, but has not been made materially more vulnerable as a result of the subsidence caused by the 2010-2011 Canterbury earthquakes.

    A property will only qualify for ILV where subsidence to the insured land has caused it to become materially more vulnerable to liquefaction. If the insured land was already prone to liquefaction before the earthquake and the vulnerability has not changed, then it won’t qualify for ILV.

    My land dropped during 2010-2011 Canterbury earthquakes. Am I entitled to cover for this?

    Not necessarily. The land does not have ILV damage if land has dropped in elevation, but it:

    • is not materially vulnerable at up to 100 year levels of earthquake shaking; or

    • the vulnerability to liquefaction causing damage has not materially increased.

    Whether or not ILV occurs at each individual property will depend on:

    • soil characteristics;

    • soil layering;

    • groundwater conditions; and

    • the amount of ground surface subsidence.

    My house got damaged because the land dropped during the 2010-2011 Canterbury earthquakes. Does settlement of ILV land damage cover the damage to my house?

    EQC settles building, contents and land damage separately. Any damage to your building as the direct result of the Canterbury earthquakes is paid under the building claim separately to your ILV land damage.

    I want to get a copy of the map that shows all properties that have been assessed for ILV and have been confirmed as having or not having ILV.

    The relevant map of properties can be found here.

    My house shakes when a truck drives past. Is this because of ILV land damage?

    There may be many reasons why your house may shake or vibrate when heavy vehicles drive by. These could include the foundation and structural elements of your house, the soils beneath your house, the roadway structure and your proximity to it, and the type, weight and size of the vehicle.

    However, in most cases the increase in shaking and vibration following the Canterbury earthquakes is due to uneven surfaces and other damage to roads.

    If you have concerns about whether your property is safe you should get a professional structural engineer to check it for you.

    My property has ILV land damage. Is my house safe?

    ILV land damage means that engineers believe your property is more vulnerable to liquefaction in a future earthquake. It is not an assessment of the structural integrity of your home.

    If you are concerned about whether your house is safe you should get a professional structural engineer to check it for you.

    What properties were being considered for ILV?

    All TC1, TC2, TC3 and flat land red zone residential properties were considered to determine whether or not they qualified for ILV land damage. This totaled to around 140,000 properties.

    Assessments of ILV land damage for rural and Port Hills residential properties will be done on a case by case basis if required.

    How many of the properties you previously identified as potential ILV have ended up qualifying for ILV?

    EQC wrote to approximately 8,500 customers to advise them that their properties potentially qualified for ILV land damage, but that further engineering and/or valuation work was required to confirm this.

    Following completion of the ILV assessment process, approximately 4,400 properties (including green zone properties and red zone properties not owned by the Crown) have qualified for ILV land damage.

    When can I expect to hear from EQC whether or not my property qualifies for ILV land damage?

    EQC has sent ILV qualification packs to all of the affected customers in 2017.

    Why were properties assessed at up to 100 year levels of earthquake shaking when determining whether they qualify for ILV? What do these levels of earthquake shaking look like?

    The selection of up to 100 year levels of earthquake shaking is consistent with the approach taken in New Zealand for other natural land hazards under the Building Act 2004 and the Resource Management Act 1991. A 100 year level of earthquake shaking is similar to the levels of shaking experienced during September 2010 earthquake. It’s important to note that not all properties experience the same levels of shaking during an earthquake event.

    What is meant by “material” in the context of engineering criteria for ILV?

    The engineering criteria for ILV require an assessment of:

    1. what level of vulnerability to liquefaction is material from an engineering viewpoint; and
    2. what level of increase in liquefaction vulnerability is material from an engineering viewpoint.

    Regarding 1 above, land can be considered materially vulnerable to liquefaction, where:

    • the land is more likely to suffer moderate-to-severe liquefaction related land damage than none-to-minor liquefaction related land damage. This is measured at up to 100 year levels of earthquake shaking; and
    • the vulnerability to liquefaction means that (without a land repair) an enhanced building foundation (over and above a TC2 foundation) is likely to be required when applying the objectives of the MBIE guidance (2015).

    Regarding 2 above, land is considered to have materially increased liquefaction vulnerability where:

    • the observed and measured changes are such that it is more likely than not that a change in vulnerability has occurred. This assessment involves consideration of the uncertainty associated with liquefaction analysis; and
    • from an engineering perspective, the measured change in vulnerability indicates that there has been a change in the use and amenities of the land as a building platform and other related purposes. In practice, an increase of more than five to ten percent in the likelihood of moderate-to-severe liquefaction related land damage is considered material.

    For more detail on what “material” means check out section 7.3 and 7.4 in the Canterbury Earthquake Sequence: Increased Liquefaction Vulnerability Assessment Methodology (October 2015).

    When assessing my property for ILV, did anyone come to my property and do an on-site inspection?

    Following each of the four major Canterbury earthquakes, rapid inspections of liquefaction and lateral spreading were carried out on foot in areas with significant damage.

    In addition, Land Damage Assessment Team (LDAT) inspection reports were done for approximately 60,000 individual properties in areas affected by liquefaction. These reports contain details of observations and locations of land damage. This material and other sources of information were used in the assessment of ILV.

    What information is used in the ILV engineering assessment of my property?

    Various sources of information were used in engineering assessments including:

    • ground surface levels derived from LiDAR (aerial surveys);
    • groundwater levels throughout Canterbury. Approximately 1,000 shallow groundwater monitoring wells have been used for this purpose;
    • aerial photographs taken after each of the four main 2010-2011 Canterbury earthquakes;
    • observed land performance relative to the estimated levels of shaking in each of the earthquakes;
    • peak ground acceleration models based on recorded earthquake shaking intensity for each of the four main 2010-2011 Canterbury earthquakes; and
    • soil characteristics data obtained from extensive geotechnical investigations. This includes data from approximately 18,000 Cone Penetrometer Tests (CPTs), 4,000 boreholes, and 6,000 laboratory tests.

    There was no drilling site on or near my property. How do you know whether my property has ILV land damage?

    The engineering assessment for ILV is based on many different sources of information, one of which is geotechnical investigations on properties such as drilling.

    EQC’s engineering advisors considered all publicly available information, including geotechnical investigations, relevant to a property. This includes geotechnical investigations outside the insured area of land where ground conditions in the area investigated are likely to be similar. Other information, such as observed land damage in the earthquakes, the extent of subsidence that occurred and the depth to groundwater in the wider area were also considered. For each property, EQC’s engineering advisors determined whether they had enough information to make an assessment or whether they needed further geotechnical investigations, before making the final assessment.

    My property has been assessed as having IFV land damage but not ILV land damage. Given that they are both based on subsidence of the land, why does my property not have ILV land damage?

    Increases in liquefaction and flooding vulnerability each result from subsidence of the land. However, whether a particular property that has subsided will have ILV or IFV land damage, or both, will also depend on factors that are not the same for ILV and IFV.

    For example, IFV land damage depends on the flow of water across the surrounding land, as well as the location of rivers and drainage channels. In contrast, ILV land damage depends on factors such as the soil composition at the property and depth to groundwater.

    It is therefore possible for a property to have subsided and been assessed as having IFV land damage, but not be assessed as having ILV land damage because it is not in an area that is vulnerable to liquefaction in a 1 in 100 year event.

    The earthquakes caused cracking damage to my land. If I repair the cracks, could that help reduce the effects of liquefaction on my land in a future earthquake?

    Yes. It is important that you repair the cracks to your land. The cracks are a category of land damage which is different to ILV. But if the cracks are not repaired, they will provide a pathway for the ejection of sediment to the ground surface in future earthquakes, and accordingly will contribute to an increase in liquefaction vulnerability.

    EQC generally pays an amount for the cracking damage on the basis of repair cost. EQC expects that an amount paid for cracking damage on that basis will be used for the repair of the cracks. This payment will be part of any visible land damage settlement in your settlement pack.

    For general guidance on repair methods that can be used for cracking damage that occurred on insured land as a result of the 2010-2011 Canterbury earthquakes, see the Guide to Settlement of Canterbury Flat Land Claims.

    Settlement of claims for ILV land damage

    How are you settling properties confirmed as having ILV?

    Settlements for ILV land damage will be made by cash payment. EQC will not itself be repairing any ILV land damage. This is consistent with how EQC has settled claims for other types of land damage caused by the 2010-2011 Canterbury earthquakes.

    When EQC settles ILV land damage, it will assess the customer’s loss in one of two ways - either:

    • the amount it would cost to repair the ILV land damage to the land under and immediately around the house (the repair cost), together with any loss of market value of the rest of the insured land as a result of ILV. In other words, this settlement amount would be based on a combination of repair cost and Diminution of Value (DOV); or
    • the loss of market value of the insured land (and, in case where the pre-earthquake house on the property remains in place and is not to be rebuilt, also the relevant associated residential building) as a result of the ILV land damage. This settlement amount would be based solely on DOV.

    All settlement amounts are subject to the land cap set out in section 19 of the Earthquake Commission Act 1993. The EQC land cover cap is generally the value of the area of damaged land or the value of a parcel of land that is the minimum lot size under the relevant District Plan, whichever is smaller.

    How do you decide which properties have their settlement based on DOV or which ones on repair cost?

    EQC’s general preference is to settle ILV land damage claims based on the repair cost (together with any DOV of any ILV that is not remediated by the ground improvement methodology). EQC is settling ILV land damage claims solely on the basis of DOV unless EQC is satisfied that, in accordance with its ILV Policy:

    • the property has not been sold since the 2010-2011 Canterbury earthquakes;
    • there is a repair methodology for the repair of the ILV land damage on the property;
    • the customer intends to undertake the repair of the ILV land damage using the repair methodology within a reasonable period of time; and
    • the repair cost is not disproportionate to the DOV of the property, determined on a case by case basis.

    EQC considers several factors in determining whether there is a repair methodology for a particular property. These factors include whether it would be recommended by a prudent engineering advisor, and whether it could practically be carried out on the property.

    More detail regarding how EQC settles ILV land damage is set out in the IFV and/or ILV Land Damage Consolidated Policy Statement.

    How would an ILV repair cost settlement compare with an ILV DOV settlement?

    In summary:

    • What you have to do with the cash settlement amount – If you are settled on the basis of repair cost, EQC will expect that you use your settlement payment to complete a ground repair of the ILV land damage. Your future entitlement to EQC cover may be affected if your settlement payment based on repair cost is not used for this purpose.

    On the other hand, if you are settled on the basis of DOV, there is no requirement to use the settlement payment to mitigate the effects of any future liquefaction. Your future EQC cover for the property will not be affected.

    • Settlement amount – For both types of settlement, the amount will depend on the specific characteristics of the property and the ILV land damage. Each property is different and is assessed on a case by case basis, so no customer’s settlement amount is indicative of another’s. Generally, the amount of a DOV settlement will be less than the amount of a repair cost settlement.

    For both types of settlement, EQC will deduct an excess. If the total amount of your land claim for a specific event is $5,000 or less, EQC will deduct a minimum excess of $500. If the claim is greater than $5,000, EQC will deduct an excess of 10% up to a maximum of $5,000 per claim.

    • Timing – Almost all ILV land damage claims have been settled in 2016 but there are still some that need to be settled in 2017. Generally a DOV settlement amount will be paid sooner than a repair cost settlement amount. EQC will not pay a repair cost settlement amount until it is satisfied that the ILV land damage repair will actually be carried out.

    What about properties where homeowner assigned their land claims to their private insurer under a valid Deed of Assignment? How are they settled?

    If a homeowner enters into a valid Deed of Assignment of the land claim to their private insurer, EQC will settle the claim with the private insurer in accordance with that assignment.

    Before assigning a land claim to the private insurer, a homeowner should take independent legal advice about the effect of taking such a step.

    What happens if I have already had a settlement for land damage or I was told I would not receive a payout for land damage?

    This previous settlement may have related to visible land damage, such as bridges, culverts, and retaining walls as well as cracking, silt removal, or undulation. You will receive an additional settlement if your land was confirmed as having ILV land damage.

    At the time the previous land settlements were made, EQC was unable to confirm which properties had potentially suffered ILV land damage.

    How is EQC settling claims for ILV land damage on red zone properties?

    EQC is assessing and settling all residential land claims across Canterbury in a consistent way – whether they are green zone properties or red zone properties.

    EQC’s priority is to first settle claims for land damage on green zone properties and red zone properties whose homeowners haven’t accepted the Crown offer.

    EQC also continues to work with Land Information New Zealand (LINZ), which has taken over management of the Crown owned red zone properties. EQC expects to agree a settlement approach with LINZ in the first half of 2017, applying the same policies EQC has used to settle green zone land claims. EQC aims to settle Crown owned red zone properties in 2017.

    When can I expect to receive my ILV payment?

    EQC expects all ILV customers will receive their settlement in 2017.

    Do some properties have both IFV and ILV land damage and if so when will they be settled?

    EQC began making settlements for customers with both IFV and ILV land damage in September 2016. All of these settlements are expected to be completed in 2017.

    DOV settlement method

    How is DOV for an ILV property assessed where the house is still in place?

    Where the house that was on the land before the 2010-2011 Canterbury earthquakes is still in place, EQC’s valuers will take the following steps to assess the amount of DOV for a property with ILV land damage:

    1. Establish the pre-earthquake value of the property

      EQC has appointed Quotable Value Limited (QV) to assess the market value of the property (both the insured land and the house) as at 3 September 2010, the day before the first of the 2010-2011 Canterbury earthquakes.

      This base valuation is a fair market valuation as at 3 September 2010 and is not distorted by the effects of the 2010-2011 Canterbury earthquakes on the property market.

    2. Determine the amount of the reduction in the property’s market value because it has ILV land damage

      EQC’s valuers assess the long-term market reduction of value, taking into account the characteristics and practical implications of the ILV land damage. For your property, this includes factors such as the increase in the property’s vulnerability to liquefaction-related damage in a 1 in 25 year, and in a 1 in 100 year, earthquake event.

      In assessing the DOV, EQC’s valuers will not take into account any shifts in value resulting from matters other than the ILV land damage (e.g. a change in the building regulations and practices after the 2010-2011 Canterbury earthquakes).

      The percentage of DOV is applied to the pre-earthquake value determined under Step 1. The result is a dollar amount of the reduction in value due to the ILV land damage.

    3. Exercise valuation judgement in a final review

      EQC’s valuers carry out a final review to ensure the reduction in value determined for the property is appropriate as a matter of valuation judgement.

    How is DOV for an ILV property assessed where the house has been or will be rebuilt?

    Where the house that was on the land before the 2010-2011 Canterbury earthquakes has been or will be rebuilt, EQC's valuers will take the following steps to assess the amount of DOV for insured land with ILV land damage.

    1. Establish the pre-earthquake value of the insured land on the property

      EQC has appointed Northland Valuers Malone Limited to assess the market value of the insured land on the property as at 3 September 2010, the day before the first of the 2010 judgement ILV land damage.

      This base valuation is a fair market valuation as at 3 September 2010 and is not distorted by the effects of the 2010-2011 Canterbury earthquakes on the property market.

    2. Determine the amount of the reduction in the market value of the insured land because it has ILV land damage

      EQC's valuers assess the long-term market reduction of value, taking into account the characteristics and practical implications of the ILV land damage. For the insured land on the property, this includes factors such as the increase in the property's vulnerability to liquefaction-related damage in a one in 25 year, and in a one in 100 year, earthquake event.

      In assessing the DOV, EQC's valuers will not take into account any shifts in value resulting from matters other than the ILV land damage (e.g. a change in the building regulations and practices after the 2010-2011 Canterbury earthquakes).

      The percentage of DOV is applied to the pre-earthquake value determined under Step 1. The result is a dollar amount of the reduction in value due to the ILV land damage.

    3. Exercise valuation judgement in a final review

      EQC's valuers carry out a final review to ensure the reduction in value determined for the insured land on the property is appropriate as a matter of valuation judgement.

    What if my ILV land damage settlement was based on DOV, but I think the land can and should be repaired?

    In this case you can request a review of your settlement decision.

    EQC may change the land settlement amount to be based on repair cost if EQC is satisfied that, in accordance with its ILV Policy:

    • your property has not been sold since the 2010-2011 Canterbury earthquakes;
    • there is a repair methodology for the repair of the ILV land damage on the property;
    • you intend to undertake the repair within a reasonable period of time using the repair methodology; and
    • the repair cost is not disproportionate to the DOV of the property, determined on a case by case basis.

    Where the settlement amount is based on repair cost, the cost is based on the repair of the ILV damage to the area of land sufficient to provide a building platform for the house on the property. Any remaining insured land with ILV land damage will be settled on the basis of DOV, if any.

    Why are you settling all properties that have a house on site on the basis of DOV? Isn’t there a recognised repair method for such properties?

    The only available ground improvement method, Horizontal Soil Mixed (HSM) Beams that may be feasible:

    • is new and experimental;
    • cannot be applied to most properties; and
    • in any event, presents many practical challenges.

    For these reasons, where the house that was on the property before the 2010-2011 Canterbury earthquakes is still in place, EQC is settling on the basis of DOV rather than the repair cost. However, if you wish to repair your land, you can seek a review of EQC’s settlement decision.

    Where the property has been sold, ILV will be settled based on DOV. Why?

    If no ILV land damage repairs are carried out before the sale, settlement will be on the basis of DOV and not repair cost. This reflects the fact that where the property has been sold, the original claimant will not later carry out the ILV land damage repairs.

    Such approach for sold properties follows the December 2014 Declaratory Judgment on the settlement approach used for Increased Flooding Vulnerability (IFV) land damage.

    What do I have to do with my ILV land settlement amount assessed on the basis of DOV?

    You may wish to use the ILV DOV settlement amount to mitigate the effects of any future liquefaction. But there is no requirement to do so. Your future EQC cover for the property will not be affected.

    Repair cost settlement method

    Will you be repairing ILV land damage?

    Settlements for ILV land damage will be made by cash payment. EQC will not itself be repairing any ILV land damage. This is consistent with how EQC has settled claims for other types of land damage caused by the 2010-2011 Canterbury earthquakes.

    Is the repair cost settlement only for a repair of the ILV land damage on my house footprint? What about the repair of ILV land damage on the rest of my land outside the house footprint?

    Under a repair cost settlement, EQC will pay the repair cost of ILV land damage to the area sufficient to provide a building platform for the house and an area surrounding the platform (1-2m) as specified for the repair in the MBIE guidance document (“the surrounding area”).

    EQC will also pay the amount of the reduction in market value, if any, (referred to as the Diminution of Value (DOV)) of the rest of the insured land area (outside the building platform) as a result of ILV land damage.

    It is not always practical or necessary to repair land outside of the building platform and the surrounding area.

    What are the benefits of repairing ILV land damage on my property?

    The repair of the ILV land damage can return the liquefaction performance of the land back to at least the level it was at before the 2010-2011 Canterbury earthquakes.

    Also MBIE guidance ground improvement methods may enable the use of TC2 foundations as an alternative to TC3 surface structure foundations. Use of MBIE guidance ground improvement methods improves the performance of the land, reducing the likely need for re-levelling in a future earthquake.

    A geotechnical site specific assessment should be undertaken by an engineer to determine the most appropriate and cost effective ground improvement method for your property.

    If I repair my ILV land damage, does that mean my property won’t have any liquefaction in a future earthquake?

    The repair of the ILV land damage is intended to return the liquefaction vulnerability of the land back to at least the level it was at before the 2010-2011 Canterbury earthquakes.

    When EQC settles an ILV claim based on repair cost, the settlement is for the cost of the land repair to the building platform and an area (1-2 metres) surrounding the platform (as specified for the repair in the MBIE guidance document). The settlement won’t cover the cost to repair the rest of the insured land – although EQC will also pay the amount of the reduction in market value (if any) of the rest of the insured land area.

    The repaired land will have a greater ability to withstand liquefaction related damage in a future earthquake than in its unrepaired state. However, the remaining land on the property that is not repaired may still be vulnerable to liquefaction, meaning that depending on the size of the earthquake, liquefaction ejecta, settlement and surface cracking may still occur on the unrepaired land.

    What are the available ILV land damage repair methods?

    Where it is necessary to remove or rebuild a house because of the extent of the earthquake damage to the house, there are numerous established land repair methods that can be used to repair the ILV land damage. These include but are not limited to:

    • stone columns;
    • timber poles;
    • reinforced soil-cement raft; and
    • reinforced gravel raft.

    These methods are set out in section 15.3.10 in Part C, and Appendix C4 of the Ministry of Business, Innovation and Employment (MBIE) guidance document “Repairing and rebuilding houses affected by the Canterbury earthquakes”. The suitability of each particular method will depend on the characteristics of a property. Specific engineering advice should be sought as to which ground improvement methods are appropriate for a property

    However, the ground improvement methods that are available where the house is rebuilt or removed are not available where the house remains in place. The only available ground repair method that may be feasible where the house remains in place, Horizontal Soil Mixed (HSM) Beams that may be feasible:

    • is new and experimental;
    • cannot be applied to most properties; and
    • presents many practical challenges.

    For these reasons, where the house is still in place after earthquakes, EQC is settling on the basis of DOV rather than on the repair cost. However, if you wish to repair your land, you can seek a review of EQC’s settlement decision.

    More information on the ground improvement methods can also be found on EQC website here.

    What do you mean by the customer intending to undertake the repair of their land in a reasonable period of time, when determining whether settlement of their claim for ILV should be based on repair cost?

    EQC will only settle based on repair cost if the repair will actually be carried out. As part of that condition, the repair needs to be done in a reasonable period of time. Otherwise settlement will be based on DOV.

    What is “reasonable” will be determined by EQC on a case-by-case-basis and will depend on the particular circumstances of the customer and their property. EQC is looking to complete all ILV settlements in 2016.

    What do you mean by a rebuild on a property in this context?

    A rebuild normally involves taking the house off the site (by demolition or relocation) and building a new house in its place. The result is that for a period of time the site will be cleared. Therefore, before the new house is built, land damage repairs can be carried out on the area of land which is the building platform for the new house.

    Will all properties that are ‘rebuilds’ get their ILV settlement based on repair cost?

    Not necessarily. Some rebuilds may not include a ground repair that will address ILV land damage and therefore the settlement will generally be based on DOV.

    How does EQC identify that there is a ground improvement method available for the ILV land damage on my property?

    If EQC has contacted you regarding a possible repair cost settlement, then EQC’s engineers, Tonkin + Taylor, will have already carried out a preliminary desktop assessment on your property. This is to determine if there may be an available ground improvement method to address the ILV land damage on your property.

    It will then be up to you to appoint your own professional advisor (for example, an architect, engineer or licensed building practitioner) as a first step in identifying a suitable ground improvement method for ILV land damage on your property.

    Where can I find a professional advisor to help me identify a suitable repair method for the ILV land damage on my property?

    Registers of qualified architects, engineers and licensed building practitioners can be found at:

    You said that I need to engage a professional advisor (for example, an architect, engineer or licensed building practitioner) to help me with the rebuild or repair of my house. Does this include appointing a home building company?

    Generally, yes. Most home building companies will employ or contract individuals with the skills EQC expects of a professional advisor. EQC will work with these persons as a first step in identifying a suitable ground improvement method for ILV land damage on your property.

    Who pays the costs of the engineer involved in the design of the ILV land damage repair?

    EQC will meet the reasonable costs of the ground improvement design own professional advisor to arrange a design, or it is prepared by EQC's engineers, Tonkin + Taylor.

    Review

    I disagree with my ILV settlement decision (amount and/or settlement method) – how can I get it reviewed?

    EQC will carry out a review when the customer provides EQC with new information or a different interpretation regarding the settlement decision. Examples of the types of supporting information you could send with your request for a review include:

    • information about a possible ILV ground improvement method for the repair of ILV land damage on your property; or
    • information about whether the house has been or will be rebuilt on the property; or
    • information relevant to the pre-earthquake valuation of your property.

    You can make a request for a review after the land settlement amount is paid. To ask for a review, please email us at info@eqc.govt.nz or call on 0800 326 243 between the hours of 7am to 9pm, Monday to Friday, and 8am to 6pm on Saturday.

    You can also send us your request with supporting information to:

    Land Challenges, PO Box 311, Wellington 6140

    What is the length of time EQC customers have to challenge a settlement for a claim made under the EQC Act?

    See here for more information on limitation legislation.

    IFV and/or ILV Consolidated Policy

    What is the IFV and/or ILV Consolidated Policy?

    The Policy includes the way that EQC approaches the assessment of ILV and how EQC will settle claims for ILV land damage. You can find a copy of the Policy here.

    What is the ILV engineering assessment methodology?

    The Canterbury Earthquake Sequence: Increased Liquefaction Vulnerability Assessment Methodology describes the approach used by EQC’s expert engineering advisors to assess whether residential properties in Canterbury satisfy the engineering criteria for recognising ILV land damage. The general objectives of the Assessment Methodology are to:

    • provide a basis for settlement of ILV land damage claims consistent with EQC’s obligations under the EQC Act, in accordance with the best available scientific understanding of ILV and the information available to EQC; and
    • provide a consistent treatment of the issues associated with ILV land damage, given the large number of properties affected.

    The Assessment Methodology sets out the objectives of the methodology and the assumptions made, the information used, and the processes applied in assessing the engineering criteria.

    Who developed the engineering assessment methodology?

    The Assessment Methodology was developed by EQC’s expert engineering advisors, Tonkin + Taylor over four years. Substantial amounts of new information, which have become available during this time, have been taken into account.

    The Assessment Methodology was peer reviewed by an independent expert review panel, comprising world-leading liquefaction researchers from University of Canterbury, University of California, Berkley; University of California, Davis; and Cornell University. The Expert Panel concluded that the “information and assumptions used in the ILV assessment are technically sound, reasonable, and consistent with the objectives set for the assessment” and that it “uses well-founded and current engineering procedures with the best available data and information“. You can find a copy of the Expert Panel peer review report here.

    What is the Increased Liquefaction Vulnerability DOV Assessment Methodology?

    This is the methodology developed by EQC’s valuers for determining DOV due to ILV land damage. This document can be found here. The methodology has been peer reviewed and approved by a panel of valuers, who were nominated by the major New Zealand professional valuation associations.

    What is the Practical Implications of Increased Liquefaction Vulnerability Report?

    The Practical Implications of Increased Liquefaction Vulnerability report has been prepared by EQC’s engineers, Tonkin + Taylor, to assist EQC and its valuers in developing and implementing an ILV DOV methodology. The report presents the advice that a geotechnical engineer would be expected to give a buyer or seller of a property in Canterbury about the practical implications that result from that property having a material increase in liquefaction vulnerability due to the 2010-2011 Canterbury earthquake sequence. These practical implications include:

    • an increased likelihood of moderate-to-severe liquefaction related land damage in future earthquakes;
    • an increased likelihood of significant liquefaction related building damage for existing residential buildings in future earthquakes; and
    • potential increased ground improvement and building foundation requirements for new residential buildings.

    ILV land damage on properties where the house has been or will be rebuilt

    What does "has been or will be rebuilt" mean

    For ILV land damage assessment purposes, EQC considers that the house on a property "has been or will be rebuilt" where either:

    • the insured land on the property is currently a vacant site; or
    • the house that was on the property before the 2010-2011 Canterbury earthquakes:
      • currently remains on the property but is intended to be rebuilt on the property; or
      • is currently being rebuilt on the property; or
      • has already been rebuilt on the property

    How do you determine that a customer intends to rebuild their house on the property?

    EQC determines the customer's intent by taking into account relevant information, such as for example, statements made by the customer and/or their private insurer, and consent information obtained from the local authority.

    How would the DOV assessment as a result of ILV land damage be different if the house that was on the property before the 2010-2011 earthquakes remains in place and is not to be rebuilt?

    In that case, the DOV assessment would be based on a different valuation methodology, which is used where the house that was on the property before the 2010-2011 earthquakes remains in place and is not to be rebuilt. The DOV would apply to the insured land and the associated residential buildings, such as the house, garage and garden shed. See Diminution of Value Methodology for Increased Liquefaction Vulnerability (for properties with residential building in place), June 2016.

    By contrast, where the house has been or will be rebuilt, EQC’s valuers use a valuation methodology developed for that situation. The DOV reflects the loss of value of the insured land only. The assessment of the DOV takes into account the impact of ILV land damage on the future use of the insured land, including as a building platform for a house. See Diminution of Value Methodology for Increased Liquefaction Vulnerability (for where the residential building has been or will be rebuilt), November 2016.

    Why is DOV assessed differently for ILV properties where the house that was on the property before the 2010-2011 earthquakes has been or will be rebuilt (as compared to where the house remains in place and is not to be rebuilt)?

    For properties where the house remains in place and is not to be rebuilt, the customer has a damaged asset (insured land) that is associated with a house that will stay on the land. The reduction in market value (DOV) will apply to the insured land as well as the house as a result of the ILV land damage.

    However, where the house has been or will be rebuilt, the pre-earthquake house no longer is, or will be, associated with the insured land. In this case, DOV cannot be assessed by reference to the pre-earthquake house as it will be replaced by a house that may have different characteristics and value. The potential characteristics and value of a new house will be reflected in the value of the insured land. The DOV will therefore be assessed for the insured land value only. This DOV assessment will take into account the likely impact of the ILV land damage once a new house is rebuilt.

    General

    Will liquefaction information go on my LIM?

    EQC does not decide what information goes on the LIM. This is a question for local authorities.

    You can find out more information on how the Christchurch City Council places information on LIMs here.

    If a property is sold, how will a buyer know if the property has ILV or IFV land damage?

    When purchasing a property, the buyer should always seek legal advice. A prospective buyer should ask the seller whether EQC has provided any information and/or made settlement payments regarding ILV and/or IFV land damage on the property.

    Does the Declaratory Judgment affect ILV properties?

    While the main questions addressed by the Declaratory Judgment in the High Court relate to Increased Flooding Vulnerability, the Judgment also confirmed that ILV is a form of land damage, Diminution of Value (DOV) can be used as a settlement method, and EQC is entitled to have a policy to settle ILV damage.

    Is a property with ILV land damage insurable?

    In general, if the customer has valid fire insurance with a private insurer then the property is covered by EQC. A customer should discuss with their private insurer whether their future insurance is impacted by the land being confirmed as having suffered ILV land damage.

  • ILV engineering assessment methodology

    You can read the main report from Tonkin + Taylor titled "Canterbury Earthquake Sequence: Increased Liquefaction Vulnerability Assessment Methodology"

    Report cover thumbnail

    Download and read:

    Main Report - Part 1 (PDF - 5.2MG)
    Main Report - Part 2 (PDF - 6MG)
    Main Report - Part 3 (PDF - 6.9MG)

    Appendix A (PDF - 3.8MG)
    Appendix B (PDF - 3.3MG)
    Appendix C (PDF - 0.7MG)
    Appendix D (PDF - 4.9MG)
    Appendix E (PDF - 7.3MG)
    Appendix F (PDF - 4.2MG)
    Appendix G (PDF - 3.2MG)
    Appendix H (PDF - 2.2MG)
    Appendix I (PDF - 1.8MG)

    Appendix J - (PDF - 3MG)
    Appendix K - Part 1 (PDF - 5.4MG)
    Appendix K - Part 2 (PDF - 6.8MG)
    Appendix K - Part 3 (PDF - 2.9MG)
    Appendix K - Part 4 (PDF - 4.4MG)
    Appendix K - Part 5 (PDF - 1.6MG)
    Appendix L - (PDF - 3.5MG)
    Appendix M - (PDF - 1.2MG)

     

    The Assessment Methodology was peer reviewed by an independent expert review panel, comprising world-leading liquefaction researchers.

    You can find the peer review report here:


     

  • Practical Implications of Increased Liquefaction Vulnerability report

    The Practical Implications of Increased Liquefaction Vulnerability report has been prepared by EQC’s engineers, Tonkin + Taylor, to assist EQC and its valuers in developing and implementing an ILV DOV methodology. The report presents the advice that a geotechnical engineer would be expected to give a buyer or seller of a property in Canterbury about the practical implications which result from that property having a material increase in liquefaction vulnerability due to the Canterbury earthquake sequence. These practical implications include:

    • an increased likelihood of moderate-to-severe liquefaction related land damage in future earthquakes;
    • an increased likelihood of significant liquefaction related building damage for existing residential buildings in future earthquakes; and
    • potential increased ground improvement and building foundation requirements for new residential buildings.

    Download and read:

Land and tree icon

Visible land damage

EQC has identified different types of land damage that can be seen by looking at different land types. 

More about visable damage

Types of visible damage to residential land in Canterbury

The guides below explain the step-by-step process for settling land claims which include visible damage to residential land in Canterbury. It focuses on the types of land damage that can be seen by looking at the land.

Guide to Canterbury Land Claims - Visable Land Damage (PDF, 6.7MB)

Guide to Settlement of Canterbury Flat Land Claims (PDF, 1.1MB)

Guide to Settlement of Canterbury Land Claims – Port Hills (PDF, 2.6MB)

Retaining walls, bridges and culverts

Under the EQC Act damage to retaining walls, bridges and culverts is also a form of land damage. This is another type of visible land damage.

More information is available in the Land Structures factsheet (PDF, 2.6MB) and on the Retaining walls, bridges and culverts page.

 

Hide
IFV letters

Increased Flooding Vulnerability (IFV)

In some parts of Canterbury the earthquakes caused changes to residential land which means some properties are now vulnerable to flooding where previously they were not.

More about IFV

Some properties are now more likely to experience a greater depth and/or frequency of flooding. However, it is important to note that Christchurch is a flat, low-lying city and there have always been areas prone to flooding.

The above diagram shows how ground subsidence from the Canterbury earthquakes has made some properties more vulnerable to flooding.

How does a property qualify for IFV?

When EQC's engineers assess whether a property qualifies for IFV land damage, they address two key questions:

  • Is the insured land vulnerable to flooding?
  • Has the insured land become more vulnerable to flooding as a result of subsidence of that land caused by the 2010-2011 Canterbury earthquakes?

A property will not satisfy the engineering assessment for IFV where subsidence to the insured land has caused it to become more vulnerable to flooding. If a property was already prone to flooding prior to the earthquake, and the flooding vulnerability has not changed, then it will not qualify.

EQC covers IFV damage to insured land only as outlined above.

IFV - Question and Answers

IFV - Factsheet (PDF, 0.6MB)

Hide
ILV letters

Increased Liquefaction Vulnerability (ILV)

In some areas of Canterbury, the 2010-2011 earthquakes caused changes to residential land that mean that some properties are now more vulnerable to liquefaction damage in future earthquakes.

More about ILV

Some properties are now more likely to experience more severe liquefaction damage in future earthquakes.

This diagram shows how some land has changed post-earthquake:

A before and after image showing the changes in ground water levels.

How does a property qualify for ILV?

To identify the properties affected by ILV land damage, EQC has collected data from a variety of sources.

This infographic showing data collection types including; shaking intensity, drilling, groundwater monitoring and ground surface elevations.

EQC's engineers have been analysing the data to confirm which properties qualify for ILV land damage.

To qualify for ILV, a property must meet three criteria:

  1. the insured land has material vulnerability to liquefaction damage after the 2010-2011 Canterbury earthquakes; and
  2. the vulnerability to liquefaction damage of the insured land in future earthquakes has materially increased as a result of ground surface subsidence of the land caused by the 2010-2011 Canterbury earthquakes; and
  3. the increase in liquefaction vulnerability has caused a reduction in the market value of the insured land and, in case where the pre-earthquake house on the property remains in place and is not to be rebuilt, also the relevant associated residential buildings, such as the house, garage and garden shed.

The first two criteria, which are the engineering criteria, are assessed at up to 100 year levels of earthquake shaking, or in other words, at the levels of shaking which on average are expected to occur at least once in every 100 years.

The engineering assessments are underpinned by the engineering assessment methodology which was developed by EQC's expert engineering advisors, Tonkin + Taylor (T+T). The Canterbury Earthquake Sequence: Increased Liquefaction Vulnerability Assessment Methodology describes the approach used by T+T to assess whether residential properties in Canterbury satisfy the engineering criteria for recognising ILV land damage. The methodology was peer reviewed by an independent expert review panel, comprising world-leading liquefaction researchers from several universities – Canterbury; California, Berkeley; California, Davis; and Cornell.

More details of the engineering and valuation assessment processes can be found in the IFV and/or ILV Land Damage Consolidated Policy Statement.

ILV - Question and Answers

ILV - Factsheet (PDF, 1.5MB)

ILV Engineering assessment methodology

Practical Implications of Increased Liquefaction Vulnerability report

Hide
Ampersand icon

ILV and IFV damage

Question and answers on properties that have suffered both IFV and ILV land damage due to the Canterbury earthquakes.

More about ILV & LFV

How does a property qualify for both IFV and ILV land damage?

IFV and ILV are two different types of land damage. Each land damage type is assessed under their own assessment methodology and the property will have qualified for both. Assessment methodologies for IFV and ILV land damage can be found on the IFV and ILV web pages.

How is the Diminution of Value (DOV) settlement amount for both IFV and ILV calculated?

To assess the amount of the reduction of market value due to both IFV and ILV land damage on the property, EQC’s valuers:

  1. assess the DOV due to the IFV land damage.
  2. assess the DOV due to the ILV land damage.
  3. add together all of one DOV and a proportion of the other DOV. The appropriate proportion is assessed in accordance with the IFV/ILV DOV methodology.

EQC’s valuers consider that simply adding together all of the IFV DOV and all of the ILV DOV would overcompensate for the combined IFV and ILV land damage. This is why they add together ‘all of one’ DOV but only ‘a proportion’ of the other DOV.

You can read more on the DOV Factsheet here

EQC’s valuers consider that buyers and sellers are likely to regard the increase in flooding vulnerability and the increase in liquefaction vulnerability as together impacting the future vulnerability of the property.

Are property owners expected to repair both types of land damage?

If the settlement amount is based on DOV, the owner may wish to use the settlement amount to mitigate the effects of any future flooding or liquefaction damage. But as the settlement amount is based on DOV, there may not be any requirement to do so. Future EQC cover for the property may not be affected.

However, if the settlement amount for the IFV or the ILV land damage is based on the repair cost, then future entitlement to EQC cover may be affected if the payment is not used for the repair purpose.

Will having both IFV and ILV land damage impact on the insurability of the property?

A customer should discuss with their private insurer whether their future insurance is impacted by the land being confirmed as having suffered IFV and ILV land damage.

Why did EQC seek a Declaratory Judgement from the high court?

EQC also sought a Declaratory Judgment from the High Court to confirm that IFV and ILV were forms of natural disaster damage under the EQC Act, and that DOV is an appropriate form of settlement in certain situations. This was so that EQC customers could be confident their land settlements are soundly based.

The Canterbury events marks the first time anywhere in the world that IFV and ILV land damage have been recognised and are being settled. A huge amount of modelling and analysis by engineers and assessments by valuers has been undertaken to enable EQC to assess and settle claims with IFV and/or ILV land damage.

Hide
Factsheet icon

Factsheets and supporting guides

Here you will find factsheets and guides relating to the different land types.

List of documents
  1. Guide to Canterbury Land Claims – Visible Damage (PDF, 6.7MB)
  2. Guide to Settlement of Canterbury Flat Land Claims (PDF, 1.1MB)
  3. Guide to Settlement of Port Hills Land Claims (PDF, 2.6MB)
  4. Land Structures Factsheet (PDF, 288KB)
  5. Diminution of Value Methodology for Increased Flooding Vulnerability (PDF, 230KB)
  6. Diminution of Value (DOV) due to both IFV and ILV land damage where house has been or will be rebuilt (833KB)
  7. Diminution of Value (DOV) due to increased flooding Vulnerability (IFV) land damage (where the house has been or will be rebuilt) (PDF, 633KB)
  8. Diminution of Value (DOV) due to increased liquefaction vulnerability (ILV) land damage (where the house has been or will be rebuilt) (PDF, 833KB)
  9. Diminution of Value (DOV) due to IFV land damage where house still in place (PDF, 585KB)
  10. Diminution of Value (DOV) due to IFV land damage where house has been or will be rebuilt (PDF 663KB)
  11. Diminution of Value (DOV) due to IFV land damage – Unit title developments (PDF, 336KB)
  12. Diminution of Value (DOV) due to Increased Liquifaction Vulnerability (ILV) Land Damage where house is still in place (PDF, 1.2MB)
  13. Increased Liquifaction Vulnerability (ILV) land damage repair cost settlements factsheet (PDF, 5.4MB)
  14. Increased Flooding Vulnerability – Unit Title Developments (PDF, 558KB)
  15. ‘Increased risk’ land damage factsheet (PDF, 283 KB)
  16. What were the Canterbury Ground Improvement Science Trials? (PDF, 164KB)
  17. Ground Improvement Trials for Liquefaction Vulnerable Land (PDF, 828KB)
  18. What is a cone penetration test (CPT)? (PDF, 290KB)
  19. What is crosshole geophysical testing? (PDF, 4MB)
  20. What is T-Rex shake testing? (PDF, 124KB)
  21. What is blast-induced liquefaction testing? (PDF, 98KB)
  22. What are stone columns? (PDF, 136KB)
  23. What are Rammed Aggregate Piers? (PDF, 314 KB)
  24. What are driven timber poles? (PDF 1.9 MB)
  25. What are reinforced soil-cement rafts? (PDF, 828KB)
  26. What are reinforced gravel rafts? (PDF, 901KB)
  27. What are Horizontal Soil Mixed (HSM) beams? (PDF, 384KB)
  28. What are standard specifications? (PDF, 65KB)
  29. What is a resource consent and why do I need one for ground improvement? (PDF, 72 KB)
  30. What is a building consent and why do I need one for ground improvement? (PDF, 37KB)
Hide

Page last updated: