Limitation reprieve for unresolved earthquake claims
It is a long-standing aspect of the law in New Zealand that court proceedings must be brought within a certain time period after the act or omission that gave rise to the claim, generally six years. This is known as a "limitation period". The limitation period provides some certainty, so that people cannot be sued for something that happened decades ago, and can move on without looking over their shoulders.
In some situations, there can be uncertainty over when the six year period begins. As the six-year anniversary of the first Canterbury earthquake approaches in September 2016, insurers, the Earthquake Commission (EQC), and insureds have all been considering when the "start date" for calculating the six-year period was, and when the six-year limitation period expires.
EQC's liability is under the Earthquake Commission Act, and is different to the insurer's liability, which arises under the policy. There are therefore different issues in respect of each.
EQC has announced that it does not consider that the six-year limitation period runs from the date of each Canterbury earthquake. Instead:
- Where an EQC claim has already been settled, the six-year time limit for bringing court proceedings will run from the date EQC settled that claim;
- Where an EQC claim has not already been settled, the six-year time limit for bringing court proceedings will start running when EQC settles that claim; or
- Where a claim is declined, the six-year limitation period will run from the date that EQC declines the claim.
Different types of policy wordings have resulted in different views about limitation periods for insurers. However, in an announcement made today through the Insurance Council of New Zealand, AA Insurance, FMG, the IAG brands, MAS, Tower and Vero have agreed not to raise a limitation defence for any residential claim relating to the Canterbury Earthquakes where proceedings are filed in the courts before 4 September 2017.
The statement said that "our members have agreed that 4 September 2017 is the earliest date a Limitations Act defence may be used. This minimum time extension has been agreed in the interests of customers. By that date, we fully expect almost all claims to be settled."
This will avoid the need for people to rush to file proceedings before the expiry of the six-year period from the date of the earthquake which damaged their home.
It is important to note that this announcement is only made on behalf of the insurers named above. Southern Response, with whom many Cantabrians are dealing in relation to their earthquake claims, are not one of those named, and they have not announced the position they are taking on this issue.
Both the Earthquake Commission and the Insurance Council have noted that the law around limitation periods can be confusing and rather technical. Anybody with any doubts about their claim should obtain legal advice.
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.