Six year time limit for earthquake insurance claims started afresh when Tower Insurance sent one Christchurch client a February 2018 letter offering extra payment following a managed rebuild.
Inicio Ltd’s property on Cashel Street in Linwood was written off after the February 2011 earthquake. Insurer Tower agreed to pay some $321,800 under its obligation to pay full replacement cost. Calculation was assessed on a notional rebuild. Inicio rebuilt, but did not replicate the former building. Nearly five years after the rebuild was complete, Inicio demanded further payment from Tower. It complained the insurer’s original contribution did not cover full replacement cost for a notional rebuild of the damaged house. In particular, no allowance had been made for ornate leaded windows and rimu joinery destroyed in the quake. In a February 2018 letter, Tower offered a further $55,000 noting that in its offer it had not deducted additional professional fees it said were recoverable for its role in the managed rebuild. Tower’s offer was withdrawn, after being extended three times. A second offer was made; $28,200, this time deducting the additional professional fees.
Inicio sued, claiming $708,870 for Tower allegedly failing to pay full replacement cost as required by the insurance policy and alleging Tower was in breach of the Fair Trading Act. Using the High Court fast-track summary judgment procedure, Tower asked for a court ruling in its favour; Inicio was out of time, it said. The Limitation Act sets a six year time limit for claims. An ‘acknowledgement of liability’ made outside the six year period, can re-start the clock. Tower’s February 2018 letter revived Inicio’s right to sue, Associate judge Paulsen ruled. A full court hearing is needed to establish the validity of Inicio’s claim.
Inicio Ltd v. Tower Insurance Ltd – High Court (7.02.20)
20.027