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Can my insurer insist?
• In some policies the insurer has a right to pay the cash equivalent of repair or rebuild but:• Did the insurer make an election
to repair themselves?• Has the insurer represented that
they would manage?• Good faith…• Rebuff threats in respect of repair
/ rebuild contract timelines.
Full and Final?
• Insurer cannot insist that your settlement is “full and final”
• Beware of full and final agreements if you are going to repair.
• May be advantages to full and final agreements where you intend an outside of policy solution
When should I agree to a full and final settlement?
• When risks are low• When you are wanting to depart
from policy• Different house• Waiting before undertaking
repair• Buying two properties
• Note the terms of the settlement agreement• “intend to…”• Repair / rebuild / reinstate /
replace?• In general must spend on
reinstatement.
Can I ask for more cash later…?
• Not if the agreement was full and final:• Limited exceptions
(such as fraud)• Partial settlements are
possible. Insurers may agree to pay more for:• Variations• Increased foundation
costs
Whose Costs?
• Insurers will provide an estimate of the reinstatement costs• No estimate is perfect• The more work is done the closer the estimate is likely to
be• Costings need to:
• Identify the damage• Have a realistic reinstatement proposal• Be costed at open market rates• Capture all costs (design, consenting, professional advice
etc). • It is often wise to take professional advice on costs
Partial Settlement: Costs
• If the insurer is not managing the repair then the homeowner is entitled to incur reasonable costs.
• Insurer not entitled to:• Dictate professionals to
use• Place caps on cost
• In reality there is a need to agree process / project with insurer.
Full and Final: Lookouts
• Policy Standard:• As / when new• Modern materials and methods
(equivalent, not cheapest)• Modern building standards /
regulatory upgrades• Additional costs
• Design / consent / survey / engineer
• Project management• Contingency / risk
• Keep a look out for exclusions for defects / pre existing condition etc
Final Comments
• What is your ideal outcome?• What is your worst case?• How much risk can you assume?• What is your appetite for conflict?• Consider the benefits of finality / control• Be pragmatic and reason-based• If in doubt take advice from a third party