Got a claim from a major flood, storm or natural disaster?
If you have suffered a loss during a major weather or disaster event, you’ll no doubt have some questions about the process. During a widespread event there is a significant increase in the volume and complexity of claims, and for this reason a dedicated approach major claims is setup. During these times Initio and its underwriter, IAG, work closely together to resolve your claim.
Who is IAG?
IAG is the registered insurer that backs initio. It’s the underwriter of your insurance policy and is the company that will be paying your claim. IAG is one of the largest insurers in Australasia, and is also the underwriter to AMI, State and NZI. Learn more about IAG’s financial strength here
Who manages my claim?
Initio manages your claim, and typically a dedicated initio claims manager will support you through the process. Think of that person as an advocate for you and your claim. Almost all communication will be through initio but at certain times you may be dealing directly with assessors or an NHC Claims Handler (if your claim also has an NHC aspect).
What is the assessment and settlement process?
- Strip out : When flood damage has occurred the first step in the process is getting the property stripped out and dried. This involves removing saturated carpets and sometimes wall linings.
- Damage assessment and report: Your property is then assessed by a property assessor (or Loss Adjuster). This is an inspection to determine the extent of the damage, and to produce an initial scope of works for the repair. Depending on the severity of the loss (as determined by the information on your initial claims lodgement) the assessment can take anywhere from a few days to a number of weeks to occur. If you obtain your own builders quote prior to an LA inspection, and it’s less likely that an assessor inspection will be required.
- Repair cost estimate: If you have obtained a repair quote, the value will be reviewed to ensure it’s fair and reasonable. If you haven’t obtained a repair quote, we will use the scope produced by the assessor, and a Quantity Surveyor (QS) then produces an estimate of the repair costs. The QS’s job is to establish a fair and reasonable estimate of the cost to repair the damage in a like for like manner.
- Payment: Your claim will then be settled based on the fair and reasonable costs to repair the damage, minus your excess. If we have settled based on an estimate of the repair costs, then we can review any extra costs you might incur when you do the work – just reach out to us to discuss if this happens.
How long does all this take?
It depends on the extent and severity of your damage. Priority is given to those people who are in vulnerable circumstances and those who have major damage affecting their ability to live in the home.
Here’s an estimate the timeframes we are seeing for each step:
Here’s an estimate of the timeframes we may see in a significant event:
Assessment (LA inspection): 1 – 18 weeks (based on priority)
Report/Scope of works: 2 – 3 weeks
Repair cost estimate (QS): 6 – 8 weeks (+ up to an additional 6 weeks if review is requested)
Payment: 2 – 3 weeks
These timelines can improve as a result of new resources, but can deteriorate because of new weather events.
Why cash settlement?
Given the size and scale of events, insurers may choose to cash settle. Your policy allows for the insurer to pay you their estimate of the reasonable cost to repair the home as a lump sum.
A cash settlement allows you to take control of your situation.
What if I do the repairs and the settlement amount isn’t enough?
If you incur additional costs to repair your property during the repair process which were not included in the scope of the repair, please contact us.
We may be able to make additional payments if they relate to the repair. Be aware that if your actual cost to repair the damage on a like for like basis exceeds the quantity surveyed repair estimate it’s not automatic that you will receive a further payment. The materials and labour rates will need to be reviewed and considered in the context of the wider market rates at the time of repairs.
It is not a situation where the payment is made to you and the claim is closed. During and after repairs we are here to ensure you get your entitlement under the policy.
What if I have obtained my own repair quote and it’s more than cash settlement?
We have seen this situation. It’s rare for quotes or estimates to be the same.
A number of things may be causing the difference, including:
- Damage identified by the builder that was not picked up in the original Loss Adjuster inspection and report.
- Upgrades, changes or more high spec materials (e.g a stone bench top instead of laminate)
- Higher materials and/or labour rates charged than estimated by the QS.
If you are not wanting to give your builder the go ahead before finalising the cash settlement amount then a review will need to be undertaken to compare the QS estimate to your quote. Please know that this may take a few weeks.
It’s your choice to delay starting repairs until you have come to an agreement on the settlement amount. This has the benefit of cost certainty, and there is less risk of a shortfall, but it does mean it will take longer to repair your property.
But I want to give my builder the go ahead now?
Once the Loss Adjuster has inspected your property you can give your builder the go ahead at any time.
You have two choices here:
a. You engage a builder to commence the work as quoted. The benefit being that you get repairs completed sooner, the downside being that there is a risk that insurance doesn’t fully cover the builders invoice. While repairs are progressing we will continue to work with you and our assessors and underwriters in an attempt to get alignment on the scope and prices. It’s a good idea to take lots of photos during the repair process, and keep good records of costs.
If you didn’t have insurance this is the approach you would be taking; getting the repairs completed as soon as possible at the most reasonable cost.
b: Wait for the settlement before commencing the work. This has the benefit of cost certainty, and reduces the risk of a shortfall, but it does mean that it takes longer to get the work underway, and we understand that it some cases it means missing out on your builder as they have to move to other jobs.
Why doesn’t Initio/IAG just repair my house?
This is because your insurer is choosing to cash settle. Having the insurer run the repairs is known as a ‘managed repair’. In short, construction capacity is in short supply during a significant disaster event and while a managed repair is usually the case for say a house fire, with the widespread damage we usually do not have capacity to offer managed repairs.
In special circumstances, an application process is available for a managed repair, but it is only considered for extreme hardship or vulnerability.
How do I receive the cash payment?
We are here to help you receive a timely and fair settlement. Once the settlement amount has been confirmed it typically takes around 2 weeks for the money to be paid.
Part of the payment process is sign-off from any interested parties. If you have a mortgagee (or Interested Party) listed on your property Title (eg if you have a mortgage with your bank or other lender) please know that the settlement money may be paid to them and not you directly. Different banks have different limits for when they require to hold the money in trust on your behalf, or agree that we can pay the settlement to you directly.
Most major banks require us to seek their decision for any payments over $50,000. Other mortgage lenders may have lower limits.
If the funds are paid to the interested party you will need to discuss with them how to access those funds. We will let you know where the funds are being settled.
Why has an excess be deducted from my payment amount?
An excess is your contribution to your claim, and so in cases where we pay a cash settlement, we deduct the excess from your lump sum payment. Your excess amount can be found in your policy schedule.
How should I use my cash settlement?
Your cash settlement payment should be used to repair the property damage according to what is in the scope of works.
Is the sum insured of my home affected?
Until the damage is completely repaired, your home sum insured amount is reduced by the amount of the claim settlement payment.
This means:
- If your home is damaged in a future event before you start the repairs for this claim, you will only have your reduced sums insured available to cover that new damage.
- If new damage happens when you are part way through the repairs, the amount you have already spent on the repairs, will be available to use as part of the reinstated sums insured.
- Your sums insured will be fully reinstated once you have completed your repair of the damage to your home under this claim.
If you choose not to get your property repaired, this will reduce the amount of cover you have for future damage to your property under insurance policy and may also affect your future insurability.
Is damage to my land covered?
Land damage is not typically covered by your house insurance policy. The Earthquake Commission provides this cover, but it is administered by your insurer. In this case IAG. Land damage does not need to be from an Earthquake, flood damage and slip can be claimed. Learn more about EQC cover and how it works .
How are loss of rents, or alternative accomodation costs paid?
If it’s likely you will exceed your loss of rent amount (for landlord houses) or alternative accommodation amount (for owner occupied houses) the entire entitlement (eg $20,000) will either be paid early in the claim process or as part of the cash settlement. Otherwise the entitlement will be paid out in chunks (usually 4-6 weeks at a time)
What happens if my rents or alternative accommodation runs out?
We cannot provide any additional payments above what you are entitled to in your policy.