CERA, Government at odds over red zone offer

Press Release – New Zealand Labour Party

Labour’s Earthquake Recovery Spokesperson, Lianne Dalziel, says government spin about the residential red zone offer seems to have confused the body that was designed to lead Canterbury’s recovery effort.Lianne Dalziel
Earthquake Recovery Spokesperson

7 March 2012

CERA, Government at odds over red zone offer

Labour’s Earthquake Recovery Spokesperson, Lianne Dalziel, says government spin about the residential red zone offer seems to have confused the body that was designed to lead Canterbury’s recovery effort.

“CERA’s Chief Executive has told a select committee that the government would return any surplus paid by the insurer or EQC if they settled for the full capital value (Option 1) to red zone home owners, when its own material says the complete opposite.

“When I asked whether the government would pocket the difference between the capital value of the property and any money received from the insurer or EQC, the committee was told that this wasn’t correct, and that any additional money would flow through to the original property owner,” Lianne Dalziel said.

“This is hugely significant. There can be an enormous difference between what an insurer might assess their liability to be and what that liability is, particularly where the insurer believes the house can be repaired even though it is in a red zone. In one instance, where an assessment went from a repair to a rebuild the difference was $140,000.”

Lianne Dalziel said the CERA website which contains details of the offer and explains the difference between the purchase price under the two options, makes it clear that the benefit of all insurance claims sit with the Crown after the settlement of the property under Option 1.

“CERA has been taken in by government spin. Because there has been no legal change to the zoning of the land and it is a so-called voluntary offer there is nothing people can do to enforce their rights other than against their insurer.

“And that is exactly why Labour MPs have been calling for independent advocacy for months,” Lianne Dalziel said.

The CERA website says:

Why is the purchase price different under the two options? The purchase price under Option 1 is higher because the Crown is taking over the benefit of all insurance claims for the damage to your land and the buildings and fixtures on your land. This means that the Crown will receive all payments made by EQC and your insurer for the damage to your land, buildings and fixtures. The Crown is only paying the land value under Option 2 because you will retain the benefit of all insurance claims for the damage to your buildings and fixtures. This means that you will keep all payments made by EQC and your insurer for the damage to your buildings and fixtures including any payments that you have already received.

Which is the best option for me? If the amount that your insurer has agreed to pay you is less than the rateable value for your building and fixtures then Option 1 will probably be the best option for you.

If the amount that your insurer has agreed to pay you is more than the rateable value for your buildings and fixtures then Option 2 will probably be the best option for you.

ENDS

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