It appears from recent conversations that I have had with people who need to rebuild their homes that insurance companies are beginning to get the rebuilding process underway in green zones.  This appears to be motivated in part by the prediction of significant shortages of skilled labour and high demands for products and materials causing building costs to rise fairly significantly in the near future.

Following conversations with some of the Project Management Offices who act for the insurance companies it appears that the insurance companies are willing to pay professional fees for design and documentation in different ways depending on your circumstances.

If you are rebuilding on your existing site it appears that in general the insurance companies will cover the cost of producing the documentation necessary to obtain building consent to rebuild the house that you had.  That is to say that you would get your old house back but with the design updated so that it complies with all of the current and revised sections of the NZ Building Code and relevant building standards, but essentially giving you back the same layout as you previously had using primarily the same materials.

This is their definition of replacement, and while it is easy to understand how they get to this definition any new house designed today is likely to be significantly different to one designed 20, 30, 50 or more years ago and it seems somewhat illogical to me to that given the way we live our lives today has changed significantly from when the majority of our homes were built that we should be rebuilding houses to a formula that is long since redundant.

If however you wanted to rebuild on your site but to a different design it appears that the insurance companies regard the design component of the architectural fees as `betterment’ which they believe they do not have to pay.  The rest of the documentation however they are willing to pay to the level that would have been necessary to rebuild your existing house.  This includes all surveying fees, geotechnical and structural engineering fees, plus building consent fees and any other necessary costs.

Where you wish to rebuild a larger house or one to a higher standard it seems that all of the insurance companies are happy for this to occur where you are prepared to meet the additional design and building costs.  If you were to rebuild a smaller or less complex house it appears that they would be unwilling to pay you out for the difference in the reduced value of your construction cost compared to rebuilding your existing house.  Rebuilding a smaller home but to a higher standard of equivalent value should be an arguable case because ultimately what the insurance company is aiming to do is to meet their obligations under your contract with the minimum amount of financial exposure.

If your site has been declared to be one on which you cannot rebuild and your insurance company is funding you to rebuild on a new site they will obviously need to cover the cost of producing a new design for this site as well as the documentation required for building consents and pricing, although in some cases I understand that insurance companies are attempting to send their clients directly to a nominated building company where they are expected to accept a standard plan.  I haven’t seen a single insurance policy where this has been written into the insurance contract, but I know from my own neighbour’s experience that considerable pressure can be applied.

The above information has all been derived from discussions with various people and can only be considered as a guide.  I strongly advise that you discuss any settlement offers with your solicitor, and if you are uncomfortable with the value being offered as a replacement for your home I recommend contacting an independent professional Quantity Surveyor to review the price being offered to you.

So what will it cost to get your house redesigned?  It will depend on the size and complexity of your home and I offer a free consultation to go through your requirements and offer you a quote.  Up until 31st March 2012 I am offering to cap this fee at $3500 incl GST for residential earthquake rebuilds.

Please feel free to call me to discuss your situation.  I don’t claim to have all of the answers but as time goes on things are becoming clearer.

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