At 4.35 am on 4 September 2010 a 7.1 magnitude earthquake occurred on a previously unknown fault line on the South Island of New Zealand. The epicentre was approximately 10km deep near Darfield.
Fortunately no loss of life was directly attributed to the earthquake. This was largely because the earthquake occurred at 4.35 am when most people were asleep and due to New Zealand's strict earthquake building codes.
Nevertheless, widespread damage and several power outages occurred throughout the region including in the city of Christchurch.
A State of Emergency was declared for Christchurch and several surrounding districts. A curfew was imposed in the Christchurch CBD.
The main earthquake was followed by a multitude of aftershocks over a prolonged period. At the time of writing in excess of 1,800 aftershocks were recorded, some of which exceeded a magnitude of 5. Some reports indicate the pattern of aftershocks is normal.
The earthquake caused structural damage to buildings, dwellings and their contents. A number of buildings of historical significance were affected.
In addition to property damage as a direct consequence of the earthquake, some property was also damaged by liquefaction. This can occur in soils consisting of alluvial deposits. Stresses caused by the earthquake weaken the soil causing it to behave like liquid undermining building foundations resulting in structural damage. In some areas sand volcanoes developed expelling excess ground water. Landslips were also recorded after the earthquake.
Many buildings were rendered uninhabitable as a result of the earthquake and liquefaction. Some buildings, including shops, have subsequently been demolished with businesses relocated.
Infrastructure including roads, rail lines, bridges, wharves, tunnels, underground sewers and water pipes sustained damage and transit lines were cut.
New Zealand has an Earthquake Commission (EQC) which is the primary provider of natural disaster insurance to residential property owners. At the time of writing it had received some 95,000 claims. Individual payments are capped at NZ$100,000 plus GST.
The consequences of the earthquake for the insurance industry are significant.
Media reports suggest this event may produce the fifth highest insurance earthquake cost in the world.
Insurance claims personnel in New Zealand have been extremely busy inspecting and reporting on the huge number of claims. Claim personnel from Australia have also assisted.
Insurance claims are proceeding for both Property Damage and Business Interruption. Property damage claims will include reinstatement of buildings, plant, contents, stock, etc. Business interruption claims may include claims for Loss of Profit flowing from: -
(a) Physical damage to property owned by the insured.
(b) Damage to the property of customers and/or suppliers of the insured.
(c) Damage to the property of public utilities e.g. power, water, etc.
(d) Prevention of access to insured property.
There is often an overlap between the above 4 types of Loss of Profit and it may not always be possible to accurately dissect a Business Interruption loss between each category.
Due to the extent of damage to property, infrastructure and the ongoing impact of liquefaction it may be several years before all claims from this event are fully resolved.
Claim Solutions is involved in the preparation of commercial insurance claims for businesses in New Zealand and your enquiries are welcome.
Other Articles which may be of interest: -
Earthquake Claims Checklist
A history of Earthquakes in New Zealand
Author
Published with permission of Claim Solutions Pty Ltd.
Insurance Policy
Country: - Australia.
Policy Description: - Mark IV Industrial Special Risks (ISR) policy.
Insurer: - Not specified.
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