Christchurch homeowners with AMI
“premier house cover” offering full replacement cover for earthquake losses are
entitled to a new house of the same style and quality of materials as the house
written off but substitute materials or method of construction is permitted
where that does not affect the functionality or character of the replacement
structure.
The
High Court was asked to rule on AMI costs for the replacement of a 1911
Edwardian-style villa at 23 Aynsley Terrace written off after the February 2011
earthquake. A particular feature of the
villa was its use of native timber for flooring and joinery.
All
AMI house insurance policies for Christchurch have been hived off into a
special government controlled entity with the taxpayer subsidising any
shortfall on funds needed to meet earthquake claims.
Turvey
Trustee, the owner at Aynsley Terrace, exercised its right under the policy to
rebuild on a new site, but there was a dispute as to the extent to which the
new construction should mirror the house written off. In particular, methods of construction and
building materials in common use have changed markedly since the original
construction in 1911.
Justice
Dobson ruled that replacement does not mean replication; it means “as new”,
being an equivalence of the old as measured by size, functionality, relative
quality and re-creation of character and appearance.
A
case from Australia in a dispute over replacement cover in insurance had
identified that it would be appropriate to use plaster board for wall lining
rather than the plaster and lath previously in use and radiata pine framing
timber rather than Oregon pine.
In
this case, it was replacement of native timber in use for flooring and joinery
which was most in dispute. Justice
Dobson ruled that in those rooms where the floorboards were exposed or covered
only by loose carpets, then AMI was obliged to pay for replacement native
timber flooring in the new house. But
for those rooms where the timber flooring had been covered by vinyl or tiles, chipboard
flooring would suffice. Similar rules
applied to joinery. Exposed native
timber joinery had to be replaced with native timbers. But joinery which had been painted over could
be replaced simply with painted pine.
Hard plaster ceiling features in the 1911 villa could be replaced by use
of a polystyrene mould and plaster covering with no material difference in
appearance.
Turvey Trustee Ltd v. Southern
Response Earthquake Services – High Court (11.12.12)
12.033