Insurers causing stress to flood victims - Federated Farmers

4.00pm

Pedantic insurance companies are proving more stressful for some flood victims than the February storm.

Wanganui Federated Farmers vice-president Tim Matthews said some of those affected were questioning the merits of building insurance after the devastating flooding of the Waitotara, Whangaehu, Turakina and Rangitikei rivers.

"Having your home and buildings flooded to a depth of 1m to 3m was bad enough, but some insurance companies are inflicting similar stress on their clients in the way they are dealing with legitimate claims," he said.

Federated Farmers had carried out a small, informal survey of affected owners in the Whangaehu Valley and found farmers' experiences with insurance recovery ranged from very good to very poor.

Problems had centred around major buildings such as dwellings, rather than contents, vehicles and farm equipment, and had highlighted the need for the insurance industry to do better.

"Some companies appear quite happy to take your money when you have a home to insure, but when the worst happens they seem reluctant to meet the reasonable expectations of most insured people -- to be put back in the position they were before the loss occurred," Mr Matthews said.

The Insurance Council, which represents most companies in New Zealand, was doing little to protect the reputation of the caring and efficient insurance companies against the actions of companies which seemed interested only in saving themselves money, he said.

Problems generally happened when a company was reluctant to declare a total loss and believed a building could be reinstated, often for an unrealistically low figure.

Mr Matthews said he was aware of an instance where a company was offering more than $100,000 less than the owner's estimate of rebuilding a house damaged by floodwater.

Another company was only prepared to wallpaper walls to the level of the flood water -- not the full wall.

"Building owners shouldn't have to suffer that sort of treatment when they have fully insured their homes and sheds in good faith," he said.

Building owners have no recourse to the Insurance and Savings Ombudsman if amounts exceed $100,000 and expensive court litigation was the only option if insurers would not face their obligations.

The Insurance Council said today it was surprised at Federated Farmers' claims.

At a public meeting in Whangaehu on the April 2, council representatives had answered many concerns, spokesman John Lucas said in a statement today.

A number of policyholders had raised their insurance problems with the council privately, and were helped, Mr Lucas said.

The council would be interested to know which insurance companies Mr Matthews said were providing poor service to customers, he said.

"Without this information there is little we can do about specific cases."

The council had explained at the meeting what insurers' would and would not pay.

"A good example of this is where a house can be repaired, but the owner does not want it repaired and wants to take a cash settlement to the full replacement value of the home to live somewhere else.

"Generally, insurers can not do this as it is outside of the conditions of the policy contract."

Mr Matthews said flood victims were getting little help from some local authorities because of councils' policies and interpretations of the Building Act, which required building consents for reinstatement.

Some building owners may be out of pocket by accepting insurance payouts without knowing what building platform levels would be required by district councils.

It was possible a householder could accept an insurance company's offer for reinstatement, but six months later find their council would not give a building consent without expensive works being done to raise the reinstated house.

"Unfortunately, the message for home owners and farmers may be the flood was not the biggest disaster -- rebuilding your life and home could well be."

Mr Matthews urged all farmers to re-examine their insurance policies and ask insurers questions regarding payouts if a flood, landslip or fire destroyed their major building assets.

- NZPA