IAG Insurance and Graeme Moore were nearly two million dollars apart in agreeing the insurance payout on a Christchurch home damaged twice in earthquakes four months apart. The Court of Appeal ruled against IAG.
Graeme Moore lived in an architect designed home on Scarborough Hill, above Sumner. It was undamaged in Christchurch’s first major earthquake: September 2010. Subsequently, it suffered $2.08 million damage in the February 2011 Port Hills earthquake; followed four months later by $2.77 million damage in a further earthquake. Insured under IAG’s Supersurance House cover, Mr Moore was told his payout could not exceed $2.5 million. The policy limit applied to a ‘series of events which have the same cause.’ IAG said the two earthquakes had the same cause, being part of the series of earthquakes in Christchurch following its initial September 2010 quake.
An earthquake specialist told the court that in a broad sense all earthquakes in New Zealand have a common cause; relative movement between the Pacific and Australian tectonic plates. More narrowly: the February 2011 earthquake was caused by a rupture of the Port Hills fault; the quake four months later by the rupture of two faults east of Christchurch. These two quakes were quite separate events, the Court of Appeal ruled. IAG’s $2.5 million policy limit applied separately to each claim.
Damage spread over several days following a tropical storm would be a typical example of a series of events with a common cause attracting a capped payout, it said. Day one: high winds might topple trees on to a house causing structural damage. Day two: lightning causes electrical damage and a fire. Day three: heavy rain floods the house. All these events have an underlying common cause: the one tropical storm.
Moore v. IAG New Zealand Ltd – Court of Appeal (31.07.20)
20.128