Against a myriad of more immediate issues affecting Cantabrians
and the insurance industry following the Canterbury earthquakes,
both the insurance industry and law profession must continue to be
alive to new issues as they emerge.
Three wearisome years have passed since that rude awakening on 4
September 2010, and many thousands of residential insurance claims
have been filed in that time. While many Cantabrians continue to
wait with ever-waning patience for settlement of those claims,
life's other events wait for neither man nor insurer.
One issue that is likely to be encountered increasingly
frequently the longer Cantabrians wait for residential repairs and
rebuild, is how to deal with the 'ownership' of insurance
claims, where the policyholder (or one of the policyholders) dies
in the time between filing a claim for earthquake damage, and
settlement of that claim.
It is common practice in post-quake Christchurch that, where a
property is bought and sold, the benefit of outstanding EQC and
private insurance claims are assigned to the purchaser. Even where
repairs are completed prior to settlement, assignment is advisable
so that the purchaser can still pursue a remedy for unsatisfactory
On the other hand, where an insured homeowner dies prior to
settlement of the claims, the legal position in relation to
outstanding earthquake insurance claims may be overlooked.
Where a property has been owned jointly and transfers to the
survivor by survivorship, it might be assumed that the
deceased's rights in relation to the insurance claims
automatically pass to the survivor. Similarly, where a property is
gifted by will, it could be considered to go 'without
saying' that any outstanding insurance claims will also be
transferred to the beneficiary under the will.
An insurance policy in two names will not necessarily mean the
policy is held jointly. So, if the insured is named as Mr X and Mrs
X, without more, the policy is deemed under written severally1. The
relevant policy is the one on foot when the events happen. The
combination of these facts means that should Mr X pass away, his
rights under a pre-existing claim continue, and Mrs X might not
receive the benefit of them, despite their intentions.
Unless a will provides otherwise (and it is unlikely to), rights
under an insurance claim will pass to the residue of the deceased
insured's estate. This scenario is problematic where the
residuary beneficiary of the estate is not the person who takes
ownership of the property, either by survivorship or by will. For
example, it may be that the deceased's spouse takes ownership
of the property, but the benefit of the insurance claim relating to
that property falls to their children, or grandchildren, or even a
The consequences could be devastating to the widow whose late
husband has already arranged and paid for repairs out of joint
savings, in reliance of later receiving a cash settlement from EQC
and/or their private insurer, only for half of those insurance
proceeds to fall to one or more unyielding successors after his
death. Still worse is the situation in which it is discovered that
the late husband was the only one named on the insurance
While the potential for this scenario may seem relatively low,
as Cantabrians grow older waiting for settlement of their claims,
the conditions are ripe for that potential to increase.
Cantabrians would be wise to verify how their property is owned,
and ensure that it is consistent with their insurance policies and
If it is already too late, but all parties are agreeable, then
deeds of assignment of EQC and private insurance claims, and a deed
of family arrangement may be used to solve the problem. Other
situations, including those involving non-family beneficiaries and
relationship property claimants, may be more difficult to
The Canterbury Earthquakes have thrown into the limelight a
great deal of practical and legal issues that have not previously
been encountered, with new issues surfacing daily. This article
identifies just one such issue, and highlights the dangers of
1Maulder v National Insurance Company of
New Zealand Ltd  2 NZLR 351
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
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