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ARTICLE · 29 FEBRUARY 2012

Canterbury Earthquakes: effects on insurance

DLA Piper Australia
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The incidence of two major related loss events in a short period has raised complex insurance coverage issues.

AustraliaInsurance
Grant MacDonald
Grant MacDonald

The second major earthquake in Canterbury in February 2011 was more devastating than the first in September 2010. Although it was of a slightly lesser magnitude, it was shallower and centred nearer the Christchurch CBD. This resulted in loss of life and greater damage than occurred during the September earthquake.

The incidence of two major related loss events in a short period has raised complex insurance coverage issues beyond those arising from each loss alone. This is particularly so for those policyholders who suffered both losses in the same policy year.

APPLICATION OF DEDUCTIBLES AND AGGREGATE LIMITS

The application of deductibles and policy limits can be dictated in the policy by whether the events are in a series and arise from the same source or original cause. We have had to obtain expert geotechnical advice from earthquake specialists in order to advise underwriters on this issue.

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