Legal action targeting the makers of faulty steel mesh in concrete floors nationwide may hit home insurance.
Photo: 123RF
A class action suit has been launched against mesh suppliers including Steel and Tube in New Zealand, and aims to group together claims of more than $100 million.
It is being underwritten from London, where insurers have indicated the mesh could compromise homeowners' insurance in New Zealand.
New Zealand's largest insurer IAG, which owns State and AMI, said it was aware of mesh as an "emerging issue" and was monitoring the situation.
Auckland lawyer Adina Thorn, whose firm is fronting the class action, said Harbour Litigation Funding in London had approached several international insurers.
"The initial view is that there could be an issue with home and contents insurance, because a term of most home and contents insurance is the buildings have to be legally compliant," Ms Thorn said.
"These buildings are arguably not legally compliant because of the steel mesh ... [there] needs to be compensation because of that risk."
The bulk of the 100,000 homes built in this country since 2012 have concrete slab floors with steel mesh in them.
Substandard mesh and flaws in the testing regime for it, were revealed by RNZ earlier this year.
The test regime is now being overhauled by the government.
'So who's responsible?' - homeowner
Lindsay Fergusson has the seismic mesh in the floor of her four-year-old home in Avonhead, Christchurch, and is joining the class action.
"[I'm] angry with the people who didn't check the product to make sure it was up to standard," she said.
"I intend to register my interests, because this house has got all our money sunk into it - it's not just insurance money, it's the investment for our future, and if we plan to sell it in a few years time we want to get the best bang for our buck, and I certainly don't want this issue to cloud any potential sale."
Retired builder John Patterson, 80, had to pull down his Parklands home because the entirely unreinforced slab in the 15-year-old house failed in the 2011 quake.
Now he has a double-thickness slab in his new house - but does not know where the mesh in it came from, or whether it is good enough.
"You assume that it's the right stuff. We can't check it," he said.
"So who's responsible? The engineers? The insurance companies? The government? The council? Who takes the rap?
"But if the insurance is talking about complaining about things, then it's the insurance companies that's been making this happen. They're the ones that's been running it all. It's shocking."
Mr Patterson said he needed to know more about the class action before deciding on joining up.
The Insurance Council said there were many unanswered questions about what risk was posed by the mesh, or any liability around it.
Insurance companies look to mitigate costs
Ernest Duval, who developed Pacific Tower and the Cathderal Junction complex in Christchurch, said a class action could have a knock on effect across the whole economy.
The problem was with certification of the mesh, not necessarily the mesh itself, so the first hurdle would be to find if there was an actual fault, he said.
If the case gathered momentum it could affect whether banks lent money on properties, which could then cause buyers to become more cautious.
"If the whole issue gets a degree of profile and a degree of prominence that all the wider stakeholders become concerned about it, then I think that you may find a large number of people [will] join a class action just to protect their interests."
It was still early days, but insurance companies were always looking to mitigate costs, Mr Duval said.
"And I think that's the real damage of this type of thing.
"So any opportunity that they might have to sort of review a claim or say, 'Well, you know, we insured this building on the basis that it had fit-for-purpose, appropriate-tensile mesh, and it now transpires that you didn't have that, so therefore we're not paying out', that is possible."
Insurers might put conditions on policies around how slab floors perform, and banks might not like that, he said.
It could be that installed mesh exposed in a building failure could be tested and found wanting by the building owner's insurer.
"That's entirely possible, and in fact I would say that's a very likely scenario, and it wouldn't just be on residential properties but it would be on commercial properties as well," Mr Duval said.