Today, IAG announced that it expected to pay $383 million NZD in flood claims. Suncorp (which owns Vero and AA Insurance), and Tower have also announced staggering claims statistics (a combined ~4,900 flood claims so far). An event of this scale reinforces how New Zealand as an earthquake and increasingly extreme weather prone country must continually learn from its previous insurance responses so that it can be ready for the next event.

Reflecting on our experience of claims from the Christchurch earthquakes and the Covid-19 pandemic, Simpson Grierson’s Christchurch insurance litigation team have some top tips for those with flooding claims.

Documenting damage is key

Months or years after the event, it can be difficult to remember or to investigate the exact extent of damage. Recording what has been damaged and the extent of it is key. Before discarding items, speak with your insurer or, if not available and items have to be discarded for health reasons, take photos as a record of the damage and note down key information (including make, model and serial numbers where possible).  Liaise with your insurer and/or other experts if you can before taking any steps. This will help avoid arguments later. Insurers have good information available on their websites and this provides a good starting point to know what to do and what will be acceptable to them in terms of proof of damage.

Carefully read and/ or speak to your broker about your business interruption policy

After the Covid-19 pandemic many people were  disturbed to learn that cover was more limited than they anticipated. Businesses should take the time to review their policy wording and talk to their broker about the ability to make claims.

Unlike Covid-19 Business Interruption claims where there was often no physical damage which caused the interruption, claims will often be more straightforward if flooding has directly impacted your business i.e. by floodwater entering your business premises. Even if floodwaters did not directly damage your business, you may still have a claim in a variety of different situations (for example if your utilities are interrupted, your suppliers or customers’ premises have suffered damage or a public authority has prevented or restricted access to your building.)

Assessor and expert availability – proper briefing reduces delay

In any insurable event, loss adjustors and experts are essential to assess and quantify the damage, and to suggest solutions. The sheer volume of claims in a major event leads to a significant decrease in assessor and expert availability, which in turn creates delay.

While there will always be a strain on the professional services market, insurers and insureds can reduce delays by carefully briefing their experts on the policy standard and on the questions that need to be answered. Doing so can avoid a common Christchurch scenario in which improperly briefed experts cause the parties to need rounds of expert reporting or to talk at cross purposes.

Be careful about hidden damage

Much like earthquake cracking that is covered by furniture or other building elements, flooding damage can be hard to find. It can be tempting after flooding events to replace soft furnishings and other obviously damaged items without considering the extent of the water damage.

Advice should be obtained from relevant construction experts about the impact of water ingress in hard to reach places (for example, inside walls and in wiring). Likewise on other items of property. It will be important to know whether an item must be discarded or whether it can be cleaned.

It is best to find this damage sooner rather than later so that it can be mitigated (i.e. drying out flooded enclosed spaces) and to reduce disagreements in future.

Our experts are here to help

Our team has a vast amount of experience assisting insurers and insureds in a wide variety of claims. If you have doubts about what is covered, or suspect that a claim will be disputed, Simpson Grierson’s insurance team is here to help.