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Other issues to consider

What if my insurer asks me to sign a Deed of release?

Sometimes an insurer will pay part of the claim, but will ask you to sign a document releasing the insurer from any further liability. This is so you agree not to pursue any claims for further loss. The document is often called a Deed of release or a Release agreement. If your insurer asks you to sign a release, you should read it very carefully and make sure you are satisfied with the agreement before signing it. You should get legal advice before signing any legal document.

Depending on the circumstances in which you signed the release, you may still be able to pursue further claims under the policy. This would particularly be the case where the document was signed:

  • in a situation where you thought you had no choice or it was the only way to get money when you needed it
  • when you did not understand the effect of the document you were signing
  • when extra claims were anticipated by the insurance company.

Case study: Where the Deed of release did not prevent further claims

In Decision 94–1143, the insurer agreed to pay a claim for water damage to the consumer’s carpet, but asked the consumer to sign a release, which stated the insurer was not liable for any further claim under the policy. However, the consumer made a further claim under the policy that was rejected. The consumer stated he had signed the deed because the insurer had withheld payment on the carpet’s replacement until he agreed to sign, and the smell from the wet carpet made his house unfit to live in.

The panel found the insurer could not rely on the release for two reasons. First, the later claim was genuine and was for damage not apparent at the time of the first claim. Secondly, the release was signed when the consumer was under considerable duress because of the pressure to get the carpet replaced as quickly as possible. The panel decided the insurer had to pay the later claim.the panel held that the floodwater was not a proximate cause of the damage to the house and that the insurer should pay the claim.

What should I do if I need to get repairs done?

This guide does not offer specialist advice about repairs. However, remember:

  • You should be careful when selecting contractors to do repairs. Unlicensed and roving builders, roof painters and repairers can appear on the scene after a storm, cyclone or flood and offer their services. They may do an inadequate job that has to be fixed by another tradesperson or they may take money upfront and not do the job. The Queensland Office of Fair Trading or Building Services Authority should be able to let you know if a person is licensed.
  • You should check with your insurer or get professional advice about repairs. Owners who begin to repair or replace damaged materials before their houses have properly dried may face higher costs later if some of the work has to be done again. For more information about repairs, contact the Insurance Council of Australia and ask them to send you a copy of their brochure.
  • The insurer cannot insist that repairs wait until it has seen the damage or given approval. If the insurer refuses to allow repairs to be done, you should take photographs and make a written record of the damage before starting work.
  • Under clause 7.20 of the General Insurance Code of Practice, where an insurer has selected and directly authorised a repairer, they must accept responsibility for the quality of workmanship and materials. Consequently, it is often best to let your insurer authorise the repairs for your property.

Do I get to ask for a new house?

The building policy will be for a “sum insured” (the specific dollar amount you are insured for) or replacement of the building.

Most policies are for sum insured. If your policy is sum insured, usually you will only get the amount of money stated as the sum insured amount. However, some policies include other cover for items such as emergency housing, cleaning or clearing up a site, or professional fees for architects, etc. Ask your insurer about what other cover is provided.

If your policy is for replacement of the building, the policy will let the insurer choose between paying for a replacement building or giving a cash payout. The cash payout must cover the full cost of replacement so long as there are no improvements in quality or standards in the new building. You should be able to recover the full cost of rebuilding your property to the same standard as before the disaster. If the insurer gives you a cash payout but this is not enough to cover the cost of rebuilding, the insurer needs to reassess your claim. You need to ask for a review within certain time limits — ask your insurer about how much time you have.

Should I accept the rebuild option or a lump sum payment?

You may be able to choose either option but think carefully about each one. If you choose the rebuild option, this means you have the money to rebuild when you are ready. If you choose a lump sum payment, this can take care of financial issues you face now but you could easily spend the money and then have less money later. If you accept a lump sum payment some policies also take away certain benefits, such as the cost of removing debris or cost of permits. Check your policy carefully and talk to your insurer about this.

If I rebuild, will my insurer cover extra costs from new building codes?

If your policy was for a sum insured amount, the insurer will not cover extra costs such as changes to planning laws unless there was a specific additional cover in the policy. In this case, your insurer will only repair or replace your house to the condition it was in before the floods. You may have cover for the new building code costs if your policy cover was to replace your house “as new” or with a replacement benefit. Most policies do include extra amounts for changes to the planning laws. Check with your insurer.

Are fences, debris removal and demolition included in my insurance cover?

Fencing replacement will depend upon the type and location of your policy (for example, is it for a business, home or farm?). You need to check the policy to see if fences are included in the cover. This may not include full costs of replacement. You should have debris removal and demolition included in your insurance policy but sometimes this is an extra benefit. Check your policy.

After a natural disaster the government and councils may offer help for fencing and debris removal, clean-up and demolition. Check with your local council whether this help is available. If the cost of clean-up and debris removal is included in your insurance policy, you should still think about using the government’s free debris removal service. You may be able to use your policy entitlements to cover other losses.

What happens to insurance when a property is owned by two people?

If a property is owned by two or more people and all part owners are named in the insurance policy, each person is entitled to get part of the insurance payout. The payout amount depends upon the interest each person has in the property. If the property is jointly owned, each person is entitled to get the full amount of the claim under the policy. If the property is owned by each person as tenants in common, the payout amount will reflect the interest each person has in the property. Usually, an insurer will deal with all the people named in a policy at the one time. However, if one person is given the payout, then that amount is held “in trust” for the other people named in the insurance policy. If you are named in a policy and are having trouble getting a payout which has been given to another person, get legal advice.

I own a share in a property but my name isn’t on the insurance policy

If you own a property with another person but your name is not on the insurance policy, the insurer can give the full payout to the person named in the policy. Get legal advice quickly if this applies to you.

I finalised my insurance claim but I think it was wrong. Can I have my claim reviewed?

Yes. If you made a claim because of disaster and you think the assessment of your loss was wrong or incomplete, you can ask for a review.

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