KILDUFF AND ANOTHER V TOWER INSURANCE LTD

[2018] NZHC 704, New Zealand High Court, Justice Gendall, 17 April 2018

Insurance (property) - Measure of indemnity - Insurers' duty of utmost good faith - Late payment

The assured's property was seriously damaged by the Christchurch earthquakes on 22 February and 13 June 2011. The house was built on the side of a slope, and the effects of the earthquakes were to cause the house to slip down the hill and to put the floors and foundations out of level. The policy issued by Tower provided that, where the assured chose to effect repair, Tower was to pay full replacement value once the cost of replacement or repair had actually been incurred: full replacement value meant "the costs actually incurred to rebuild, replace or repair your house to the same condition and extent as when new and up to the same area as shown in the certificate of insurance ..." The assured elected to repair, and it was common ground that Tower's obligation to provide indemnity was triggered by the claimants' incurring liability to the repairers rather than actually making payment to the builders. A claim was made against Tower in September 2011, initially seeking NZ$188,000. Tower obtained its own assessments. Tower made lower offers of payment in June 2014 and October 2014, but those were rejected.