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State EQ settlements - don't sign your rights away

State asking for more than it's due

I'm working with clients who are in the process of settling their EQ claims with State. To finalise the process the clients have been asked to sign a deed of transfer which gives all the benefits of their EQC claims, both for the land and for the house, to State.  

As you may know EQC insure land and dwellings separately. EQC generally (ie 100% of the time in cases that I've seen) settle on the loss of value caused by the land damage. They do this by taking a pre-damage valuation of the whole of your section, then multiplying this by percentage of the section which is damaged. (ie $100,000 section 10% of which is affected = $10,000 settlement).   

State's policy, like most, doesn't cover damage to land. So State are asking for recovery of money paid for a contingency (land damage) which State does not have to pay a cent for

State's reasoning for this is that the TC3 land under the foundations will need remediation, and EQC might one day decide to contribute to so (is that the sound of a flying pig I hear?). So State should be able to recover these funds direct from EQC, right? And State will be fair and only keep the amount related to their remediation costs, right? 

But this doesn't stack up, because;
- The deed is full and final and says "[f]or the avoidance of doubt, the Policyholder shall have no further rights to, or interest in, the Benefits of the [EQC] claim.";
- State already has the right to any EQC funds which relate to the cost of remediating a dwelling under its rights of recovery in the policy; and
- State's only interest is in the land under the foundations, not the rest of the section.

If you are settling an EQ claim with State and are asked to sign away your EQC land claim, give me a call.