Measure of indemnity: successive losses

The Christchurch earthquakes of 2010 and 2011 have generated a mass of cases both on the measure of indemnity as a matter of common law and on the proper interpretation of policy wordings. Three factors have combined to complicate the issues. First, outside marine insurance, there is almost no authority on the proper approach to successive losses in the same policy year, where those losses culminate in a total loss following the assured having sustained damage which has not been repaired.

Secondly, many of the buildings were underinsured. That led policyholders to seek to recover – by aggregating unrepaired damage – the full amount of their actual loss from insurers even though the insured sum was lower. Thirdly, few policy wordings contemplated the events that ultimately transpired. In a long-awaited decision, the Supreme Court of New Zealand ruled, in Ridgecrest NZ Ltd v IAG Ltd [2014] NZSC 117, that an assured who suffered successive losses in the same policy year was entitled to recover for each of those losses even though repairs had not been effected.