There are lessons to be learned from reading and understanding the small print in property insurance documents.
I’m sure there are legendary cases in South African law but I came across an example recently that illustrated why this golden rule should be followed, even if an attorney schooled in such documents needs to be consulted.
Of course, even then you could find yourself involved in lengthy litigation.
Consider the case of the Fitzgerald Family Trust, the registered owner of a 1920s double storey weatherboard house damaged eight years ago in the earthquake that devastated large parts of the New Zealand city of Christchurch.
The Trust took insurers IAG to court over the issue of repairing the foundations of the damaged house. Justice David Kendall handed down his judgement a few days ago.
The dispute arose over the wording in the insurance policy held by the Trust over the property. In earlier cases over similar issues the Appeals Court had recognised the difference between “as new” and “when new” standards included in various property insurance policies. To a lay person there seems to be little difference between the two terms. Not so says the high court.
Justice Kendall ordered that the foundations be restored by IAG to as similar to the original condition as possible and not to modern standards as required by the Trust. He agreed with IAG that injecting the existing foundations with epoxy resin and re-levelling the house by jacking and packing the support timber poles under the house met the insurer’s policy obligations. Undertaking those remedial actions would support the house, restore its appearance and meet the relevant consenting and building code standards.
The trust called in construction experts to state in court that the correct way of restoring the house was to cast new foundations in concrete, apparently a far more costly method.
It should be noted that when the house was built in the 1920s, the building standards at that time required that the foundations support vertical loads only, not horizontal or lateral loads as might be experienced during earthquakes.
So, while South African property owners may not live in fear of too many earthquakes, we do have cover for other natural occurrences such as floods, high winds and even ground subsiding in some heavily mined areas on the Reef and in the Free State.
Words: Blake Wilkins