Hundreds of Canterbury homeowners have been told their insurer may be underestimating the cost of repairing or rebuilding their properties by up to 60 percent.
A house hit by the Christchurch earthquakes Photo: RNZ / Diego Opatowski
About 250 Southern Response policy holders attending a meeting in Christchurch last night to discuss a potential class action against their insurer.
Lawyer Grant Cameron said Southern Response had used delay, deny and defence tactics for more than four years and said cost savings were the most likely explanation for how the insurer has handled claims.
The Government bailed out Christchurch insurer AMI - which then became Southern Response - after the earthquakes to the tune of $1 billion over 10 years.
Mr Cameron said the repair or rebuild figure the homeowner received was, in many cases, vastly different to the dollar figure on the insurer's files.
He said Southern Response customers had been under "immense stress" since the earthquakes and said people's lives were on hold until their claims were settled.
The meeting included videos from Southern Response policyholders talking about their dealings with their insurer.
Among them was a man who had been given a repair figure of $255,000.
An independent engineer then found the property's foundations would likely need replacing and subsequently, a quantity surveyor estimated the cost of reinstatement would be upwards of $1.25 million.
Mr Cameron believed by lowballing claim amounts, Southern Response could end up making about $2 billion in savings.
He said it would take nine years for Southern Response to settle all claims at its current progress rate.
The class action has received the backing of a litigation funding company, Litigation Lending Services.
Participating homeowners would only pay a fee if the litigation was successful.
Francis Cooke QC told homeowners that while many may be concerned with their own situation, many shared common problems.
He believed the prospects of success were good.
"It seems to me that the insured is on the better side of the argument than the insurer."