Janine Starks finds out how far accommodation allowances will stretch for earthquake rattled residents who are moving on.

By Janine Starks*

From my mail bag: My house was badly damaged in the February earthquake and it is uninhabitable. A major repair or demolition is necessary. My policy with State Insurance says, “We’ll pay the reasonable costs of alternative accommodation”. I have chosen to live with family in Northern Ireland and I pay them rent every month. The insurance company refuses to pay alternative accommodation because I live overseas. 

There is an Irish blessing which says “May the roof above us never fall in and may we good companions beneath it, never fall out”. Unfortunately not enough Irish blessings were bandied around Christchurch and the quakes have played a lead role in causing roofs to fall in and families with long-staying guests to fall out. 

So my first point, which I want to make ever-so gently (but subtlety isn’t my strong suit), is whether you’ve weighed up the pros and cons of living in the Irish family home as an adult? Is it a wise move to still be there six months after the event?

You may have a mortgage in New Zealand and are giving your family an amount to cover expenses, but surely it can’t go on indefinitely? In between those pints of Guinness and jigs around the dining table, be vigilant in terms of your relationships. It’s easy to think others are happy and impossible for them to ever tell you otherwise.

No pity please

I have to toast you in one regard – you are paying ‘rent’ and hopefully paying your way. While it sounds like a blindingly obvious thing to do, so many people are full of their own woe and utterly blind to the expense and disruption they are causing others. Well-meaning family start to believe they actually owe it to you.

Even when you make your stay cost-neutral, most will rejoice in having their space and privacy back once you are gone. Cost neutral isn’t always the same as emotionally neutral. The old rule of ‘visitors smell after three days’ is obviously far too harsh in a natural disaster, but there needs to be some common sense which exists somewhere between three days and six months.

On the flip-side, you’ve been decisive in moving out of Christchurch and indeed moving from New Zealand (possibly permanently). It’s perfectly reasonable to do this and international borders should not impede an insurance claim. What does impede it is staying with family.

I’ve spoken to State Insurance and they don’t cover rental payments to family. On one hand, I can see their point as it gives rise to the risk that the numbers are fiddled and the arrangement isn’t transparent. On the other hand, despite their ruling on ‘family’, I would still take up the argument with State again.

The one thing you learn about insurance is that individual circumstances are important. For example, if for emotional reasons you need to be with family right now and they have added you to their own rental contract, you have strong evidence of an arms length arrangement. If they are home-owners, you could show you are paying rent via an automatic payment, with a proper contract in place.

Above board and on table

Slipping your family cash under the table doesn’t give rise to a good paper trail. I have not discussed this with State, but if your policy document is silent on the matter of family and you can show an arms length arrangement, then it may be negotiable. State Insurance, for all their history of being a big old dinosaur, is very reasonable to deal with.

It is not your location in Ireland that they have a problem with (although it sounds like you’ve been led to believe this). State takes the view that they will pay “reasonable costs”.

Suitable accommodation still exists in Christchurch, so local rents will be used to cap your claim (not Northern Irish rents). They want to avoid you claiming rent of £300 a week (around NZ$600), when local rents may be $300 a week. They will also base the rent on that of a house suitable for a single person, not a large family.

Logic doesn't always apply

If you lose this argument, it is going to be more profitable for you to rent independently of your family (you have to admit it’s a more sensible long-term option). Moving out of the Irish home due to a silly insurance rule, might just cost State more money. That seems like madness, but ‘life is a strange lad’.

With any insurer, they will respond if you engage them with reasonable financial arguments. Prove to them that your current set-up saves them money and they’re likely to contemplate a bit of rule-bending. While airline tickets are not covered, State will want to discuss when you purchased your tickets.

If this was part of a move planned prior to the earthquake, they will be less likely to meet the accommodation claim. However, if you cancelled your return ticket, this might stack up. State will pay for local moving costs and this can be put towards the cost of your international move. Likewise, they will cover storage bills.

Finally and this really is the most important point. In order to trigger these accommodation allowances, your home has to be uninhabitable. State insurance have three guidelines for this:

• First; structural damage making the house unsafe to stay in.
• Second; no working sewerage system of any kind.
• Third; where lack of services is dangerous to an individual (e.g. someone needing a breathing apparatus).

Also bear in mind, if the insurer can make temporary repairs to get your home livable again, these will be taken out of your accommodation allowance and rent won’t be paid. For anyone thinking of moving overseas, the golden rule is to talk to your insurer before you leave, so you are clear about the entitlement. 

Do you have a question for Janine? You can email her directly at starkadvice@gmail.com, subject line: Financial Agony Aunt. Anonymity is guaranteed.

*Janine Starks is Co-Managing Director of Liontamer Investments. Opinions in this column represent her personal views and are not made on behalf of Liontamer. These opinions are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.