The recent earthquakes have made insurance a topical issue for vendors and purchasers.

It is timely to update agents on two important considerations to bear in mind during the conveyancing process.

Notional EQC claim

Recent advice from the Law Society has recommended that before settlement all vendors should lodge a “notional” claim with EQC for any potential damage that might arise. 

A notional claim means that the vendor is given a claim number and the property address is registered on EQC’s system.  It is then possible for the vendor to assign the claim to the purchaser at settlement.

This process protects both parties in the event that any damage does become evident after settlement (noting that not all earthquake damage can be seen from a visual or non-invasive inspection). 

If it is discovered after inspection of the property that there is no damage, the vendor (or the purchaser if settlement has occurred and the claim has been assigned by then) simply does not pursue the claim any further (at no cost or negative consequence).

If damage is discovered, the vendor or purchaser as applicable should work with EQC to proceed with a claim.

We are aware that some agencies are already including an EQC clause in the further terms of sale.  Where this is not included, lawyers acting for purchasers should be contacting the vendor’s lawyer to request that a notional claim be lodged as soon as possible after the offer becomes unconditional.

Seller’s insurance assigned

Many purchasers are worried about insurers not taking on new customers, and the possible impact this will have on their ability to purchase.

A similar problem was faced after the Christchurch earthquakes, and this was dealt with by the parties agreeing that the vendor would assign their existing insurance policy to the purchaser, rather than the purchaser taking out a new policy.

In light of the recent earthquakes, some insurance companies are allowing vendors to assign their policies to purchasers.  In this event it is usual for particular paperwork to be completed to complete the assignment, and parties should seek independent legal advice before signing.

While insurance remains a live issue, we recommend that purchasers make their offers conditional upon obtaining satisfactory insurance (rather than assuming that this will be taken care of by a finance or due diligence clause, or making an unconditional offer).  Purchasers should then begin investigating insurance options as soon as possible after their offer is accepted.

If you have a client who is affected by this issue, you should recommend that they take legal advice as soon as possible. 

For more information about insurance please contact Laurie Pallett at or on (04) 473 6850.