If your house has been damaged by an unexpected event, there may be issues with the repair process, the scope of repairs, or how much the repairs will cost. Read this guide to find out more.
If your house has suffered loss or damage after an unexpected event, repairs may be needed, and it can be stressful and overwhelming to make an insurance claim.
Because your house is usually one of your biggest assets and building work can be expensive, it’s important to understand the repair process and what to do if you are unhappy. Regular and open communication between you, the repairer and your insurer can help make sure everyone has a shared understanding of the repair process.
Priya* and Joe’s* lengthy claims process
Priya and Joe’s house was badly damaged after a storm. The insurer accepted the claim, but Priya, Joe and the insurer could not agree on what repair work was needed to fix the house. After a year, Priya and Joe made a complaint to the IFSO Scheme. The IFSO Scheme case manager supported Priya and Joe to get an independent builder’s report and quote. This helped everyone to agree on the work required. The insurer put forward a new cash settlement amount to finalise the claim.
Kevin* and Kath’s* defective repairs
Kevin and Kath’s house was damaged in an earthquake. The insurer accepted the claim and repair works were completed by a builder. Kevin and Kath were not happy with the quality of the repairs and the insurer and builder agreed there were defects to be fixed. However, when the remedial work was completed, Kevin and Kath felt it was also unsatisfactory. The IFSO Scheme case manager talked with Kevin, Kath and the insurer. An agreement was reached that an independent loss adjuster would be appointed to inspect the work and provide a report to fix any defects. Based on the independent report, the insurer paid Kevin and Kath an additional amount to finalise the claim.
A Trust’s* repair method dilemma
A Trust’s rental property was damaged in an earthquake. The insurer assessed the house as being repairable and provided expert evidence. The Trust felt that the house could not be repaired and asked the insurer to pay for the full replacement of the property. The IFSO Scheme told the Trust that it would need to provide a professional opinion to support its view that the house was not repairable. The Trust did not provide a professional opinion and the IFSO Scheme confirmed the insurer was only required to repair the house, not replace it under the policy.
*Names have been changed
When you make a claim for loss or damage to your house, you can expect the following to occur:
If you would like the repairs completed differently to what your insurer says is required for the claim, you can request this. However, you will need to pay any additional cost.
For example, if the claim repair uses basic kitchen tiles but you would like to use expensive tiles instead, you will have to pay the additional cost.
Similarly, if you ask the repairer to complete additional work outside of the scope of the claim repairs, you will need to pay for this. For example, if the claim repair includes replacing part of your outdoor decking, but you would like the builder to replace all of the decking around your house, you are responsible for the additional cost. An insurer must only pay for what has been damaged, but not for undamaged property.
Different insurance policies will have different settlement options for a house claim. Check your policy wording for how the insurer will settle your claim. Some policies may give the insurer the option to pay you the amount it will cost to complete the repair, instead of arranging the repairs for you. In this situation, you receive money from the insurer for the repairs. You then arrange the repairs yourself with a professional of your choice.
It is a good idea to get legal advice before signing any cash settlement documentation, and to get your own independent building advice about the problems and what it will cost to fix them. These types of settlements are usually “full and final”. This means it is unlikely the insurer will pay any further money towards the repairs after the agreement is signed.
Different insurance policies will have different wording about the standard of the repair that will be completed. Generally, the standard of repair will be to a condition that is similar to when the damaged part of the house was new. Check your policy and, if you are unsure of the repair standard that applies to your claim, ask your insurer to provide further information.
The Building Act 2004 requires all building work to comply with the Building Code. This includes any work that is completed as part of your claim repairs. In some circumstances, this may mean that the repair work upgrades the damaged part of the house to comply with the current Building Code. However, this only applies to the specific claim repair work. The insurer is not required to upgrade other parts of your house to comply with the Building Code.
If you identify problems with the repairs to your house, there are some steps you can take:
Read your policy and any build contract
Check your insurance policy to understand the standard of repair that your insurer will provide. The build contract will also set out who is responsible for the repairs and who will be responsible for fixing any faults.
Maintain open communication with your repairer and insurer
Communication is important throughout the claim and repair process. You can ask the insurer and repairer for details of the repair and timeframes. Let the insurer and repairer know of any questions, concerns or issues you have, so you can resolve these together at an early stage.
Escalate issues if needed
If you are having difficulty communicating with your insurer or repairer and there are unresolved issues, you are able to make a complaint so these can be reviewed.
Get advice before signing a settlement agreement
Get legal and building advice before signing any settlement documentation. If you sign a “full and final” settlement, it will not be possible to get any more money for the repairs.