Homeowners with a shared driveway are being urged to check their insurance cover after five Whangarei neighbours were left $16,000 out of pocket.
When their joint driveway was damaged, the cost of repairing the surface was divided five ways and a $5000 insurance excess applied to each individual claim, meaning the five got nothing.
One of the residents, John Kennedy, said the drive he shared with four other homeowners was badly damaged when a storm hit Northland in March last year.
A landslip beneath the 300m driveway left it cracked and partly subsided. It remained driveable, but engineers found that it would probably have only six months before it worsened.
Kennedy put in a call to his insurance company, AMI, and was told to claim through the Earthquake Commission first.
So he and his neighbours all lodged claims with EQC, which paid out $20,800 altogether in October last year.
The EQC claim had a $200 excess for the damage relating to each house and $500 for the land for each household's claim. "We were quite happy with that," says Kennedy.
But when he came to claim the cost of fixing the surface of the driveway - which is not covered by the EQC - he found a $5000 natural disaster excess applied for each individual household.
Kennedy says AMI assessed its exposure to cover fixing the driveway at $10,925. But by the time that was divided among the five homes, his insurer would cover only $2185. And because of the $5000 excess for natural disaster claims, he got nothing.
"We were stunned - absolutely stunned," he said. "We thought they would have taken the $5000 off the $10,925 and we would still get $5925."
But he said AMI told him it would only take his share of the driveway into account.
Two other residents also claimed with their insurers but got the same result. In the end, repairing the driveway surface cost $16,000.
Kennedy complained to the Insurance Ombudsman and was told the insurer had not broken any laws. But he questions whether the situation is fair and reasonable.
"If I was the only dwelling on the driveway, I would have received $4900. But because I share with neighbours I am impacted unfairly."
Brendan McGillicuddy, national portfolio manager – home for IAG New Zealand, which owns the AMI brand, said it introduced a $5000 natural disaster excess in 2012 for claims involving parts of a property not covered by EQC.
"IAG ran a significant campaign about the changes at the time, including advising customers when their policy renewed.
"The changes were about balancing the cost of insurance for customers against the cost of managing natural disaster losses. We always encourage our customers to read their policy to know what they're covered for, and those who are unsure can give us a call anytime."
Kennedy asks why insurers don't ask people taking out or renewing a policy whether they are on a shared driveway, to make them aware of the situation.
But McGillicuddy said it was up to individuals to find out their rights and obligations when buying a property with a shared driveway.
"This can avoid disputes with your neighbours and any other surprises over the shared driveway.
"Often, repairs and maintenance is usually shared equally between all parties. If this is the case, each property owner will have their own excess as part of any claim they make under their own home policy if the driveway is damaged."
Tim Grafton, chief executive of the Insurance Council of New Zealand, said the 2012 change was an industry-wide response to the Canterbury earthquakes.
"They're now standard on house policies industry-wide.
"Where a claim is made for damage caused by a natural disaster to something that isn't covered by EQC, such as driveway surfaces, insurers will generally apply the standard natural disaster excess."
Grafton said where there was damage to a shared asset, insurers would generally apply one excess per policy.
"This is the same whether or not the damage is caused by a natural disaster. This is as per the terms of cover under most insurance contracts, which state that one excess is payable per claim.
"If five people are claiming on five different policies, then the excess specified in each of their policies will apply to each of their claims."