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Section 28 ('limitation') notices

After cash settling a building or land claim, EQC sometimes limits or cancels EQC insurance (EQCover) for the property involved.

  • We do this by sending the owner a written notice advising of the limitation or cancellation.
  • We also arrange for a notice to be placed on the Certificate of Title (‘land title’) for the property.

Legal references:

Section 28 of the Earthquake Commission Act

Limiting EQC insurance for some landslip and flood claims

After cash settling a claim for landslip or flood damage, EQC sometimes limits the EQC insurance (‘EQCover’) for the property involved.  EQC can do so in the particular situations set out in clause 5(2) of Schedule 3 of the Act.

EQC does this by sending you a written notice advising of the limitation.   It also arranges for a notice under section 28 of the Earthquake Commission Act to be placed on the Certificate of Title (‘land title’) for your property.

The limitation notice appears on the Certificate of Title (‘land title’). It remains in force until we’re satisfied that the repairs or reinstatement have been completed – at which time, we have the notice removed. 

What is the effect of a limitation notice?

If your property has a limitation notice on its land title, EQC has the discretion to decline a claim that you put in for that property (where the claim relates to the damage that hasn’t been fixed). This is set out in clause 5(2) of Schedule 3 of the Earthquake Commission Act 1993.

If you have a section 28 notice on your land title, contact EQC to find out what this means for the EQCover for your property.

When is EQC likely to issue a limitation notice?

Limitation notices are most likely to be placed following claims for damage from flooding or landslips – and where there is a risk of similar damage occurring which can reasonably be avoided.

How does EQC go about issuing a limitation notice?

About three months after sending out the cash settlement, an EQC employee contacts the customer to ask about progress with their repairs or reinstatement.

  • If EQC is satisfied that the repair work (or reinstatement) is progressing, then no further action is taken.
    • Examples of progress might include having applied for a building consent and waiting for it to be issued, or being in the process of contracting a builder or other contractor.
  • If we’re not satisfied that the repair work (or reinstatement) is progressing, we’ll notify the District Registrar of Land that a limitation notice should be applied to the land title.
    • Examples of a lack of progress might include where no relevant contractors have been (or are in the process of being) appointed; or no building consent application has been made (where applicable).

How do I get a limitation notice removed from my land title?

A limitation notice remains in place until EQC applies to have the notice removed – even if the property is sold.

To get a limitation notice removed from your title, you need to provide EQC with evidence that the repair or reinstatement works have been undertaken.

Your evidence may include:

  • a copy of the Code Compliance Certificate (where a building consent was issued for the repair or reinstatement work)
  • copies of contractors’ invoices that have been paid
  • photographic evidence (eg, photographs of new bridges, culverts or retaining walls).

When satisfied, EQC will notify the District Registrar of Land that the limitation notice should be removed. You’ll be informed when this has been done.

Other situations

There are other provisions in Schedule 3 of the Act that allow EQC to decline or partially meet a claim under appropriate circumstances.

Cancellation of EQCover

EQC can cancel EQCover for a home or land. In this case, a cancellation notice (also under section 28) is placed on your land title.

EQC considers issuing a cancellation notice when the cash settlement for the claim is the full amount allowed for and the property is neither replaced nor reinstated to EQC’s satisfaction.

For the purposes of considering whether to cancel cover:

  • the full amount your home is insured for is usually $100,000 (plus GST)
  • the full amount your land is insured for is usually the value of all your insured residential land or the value of the minimum-sized building site allowed in the area in which you live, whichever area is smaller.

If a customer’s EQCover is cancelled, they won’t be able to claim from EQC – irrespective of the natural disaster. In addition, private insurers may refuse cover if EQCover isn’t provided. (Cancellation can be undone if EQC is satisfied that it is no longer appropriate.)

Relevant extracts from the Earthquake Commission Act 1993

Schedule 3 – Conditions applying to insurance under this Act

  • Clause 3 – Circumstances where Commission may decline claim
  • Clause 4 – Cancellation of insurance in certain circumstances
  • Clause 5 – Commission may limit its liability in certain circumstances

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