3 key takeaways
- There are just over 3 months until the expiration of the 6-year limitation period for Kaikōura earthquake claims.
- If your insurer has not paid your claim before 14 November 2022, consider either filing court proceedings or negotiating with the insurer to “stop the clock” or waive the limitation defence.
- Take action even if the insurer has not formally declined the claim or if there is no dispute yet.
There are time limits for claims
Like many other countries, New Zealand’s legal system encourages quick resolution of disputes. The Limitation Act 2010 says claimants have “6 years after the date of the act or omission on which the claim is based” to make a claim. This is not easy to apply when it comes to an insurance claim. Some insurers interpret time limit running from the time they have settled or declined the claim. However, that is not what the Act says. Also, not all insurers take the same view.
The position is UK is settled
In UK, the position is that for an insurance claim, time starts to run from the time when the loss happens. The recent case of Bann Carraig v Great Lakes Reinsurance (2021) proves the point. In that case, vandals broke into a gym and caused damage. The gym owner started proceedings against the insurer 6.5 years after the loss. The Court held that the claim was out of time, and the owner could not bring a claim anymore.
The position in New Zealand is unclear
The situation in New Zealand is not entirely clear. But we have some commentary from the Courts that indicate that they would adopt a similar position.
For example, the Supreme Court acknowledged in Xu v IAG New Zealand that in the case of earthquake damage, the right to payment for the loss arises at the time of the earthquake. If that is correct, the owner is entitled to demand payment from the time of the earthquake. So, time should start running from that point.
In Inicio Ltd v Tower Insurance [2020] NZHC 90, the High Court said that “the orthodox approach” in the case of property insurance is that time begins to run from the date of the earthquake.
Take action even if the insurer has not formally declined the claim
There are claims, especially for large commercial buildings or body corporates that take a long time to assess. The insurer might not have made a decision either way yet. Even in those situations, you should be discussing with your lawyer and your insurer about the limitation date.
Don’t risk your claim
You don’t want to be in a situation of having to argue with your insurer whether you can even bring a claim! There are alternatives to “stopping the clock” and if the insurer is genuine about the delay in paying the claim, it should not be difficult to come to an agreement. Please contact me @ emma.gabor@gaborlaw.co.nz to discuss these alternatives.
