The cost of independent help with an earthquake claim in New Zealand

What an earthquake mandate involves

Earthquake work goes beyond inspecting visible cracks. A typical mandate begins with an analysis of both the natural hazard cover managed for the Natural Hazards Commission and the private policy, to establish which losses fall under each and where the private top-up begins.

The advocate then inspects the property, often more than once, coordinates floor-level surveys and engineering assessments, and compares the findings with the insurer's scope of works. Negotiation can stretch over many months, particularly where foundations, land damage or the repair-versus-rebuild question are involved. Follow-up after settlement, such as checking that managed repairs match the agreed scope, may also form part of the work.

Specialist reports and who pays for them

Engineering and survey costs can be a substantial part of the total cost of an earthquake dispute. Ask whether the advocate's fee includes commissioning these reports or whether they are billed directly to you. In some cases the insurer will fund its own engineering, and occasionally it may agree to share or reimburse an independent report, but this should never be assumed.

Typical additional reports include structural or geotechnical engineering opinions, floor-level and foundation surveys, quantity surveyor estimates and, for older homes, testing for hazardous materials before repairs begin.

Indicative amounts, to be checked with each expert.

Indicative fee tiers in New Zealand dollars

Percentage fees remain the most common model, but many advocates apply them only to the private insurance portion or to the uplift they achieve, recognising that part of the claim may be relatively straightforward. The table below shows an order of magnitude observed on the market. It is indicative and unofficial; individual firms and individual claims vary.

Rates are generally quoted before GST at 15 percent, and engineering or survey disbursements are often extra.

Calculation methods and their effect

The same rate can produce very different costs depending on its base. Read the engagement letter to see exactly which figure the percentage applies to.

• Whole settlement: the fee is calculated on all amounts paid, including any natural hazard component
• Private top-up only: the fee applies to amounts paid by the private insurer above the natural hazard layer
• Uplift: the fee applies only to the improvement over the insurer's written offer or scope
• Fixed fee: a set price for tasks such as reviewing a scope or an earlier repair
• Hourly: time-based billing, common for advisory work on previously settled or on-sold properties
• Minimum fee and disbursements: a floor amount plus pass-through costs for reports and travel

Policy cover for advocate fees

Residential policies commonly cover reasonable professional fees needed to repair or rebuild, such as engineers, architects and consents. These are tied to reinstatement, not to negotiating the claim, so an advocate's fee is usually your own cost. The natural hazard scheme likewise focuses on the cost of repairing damage and is not designed to fund your representation.

Commercial property policies may include a claims preparation extension with a sub-limit, though wording often excludes loss assessor or advocate fees. Check the policy, and if in doubt ask the insurer in writing before relying on reimbursement.

Small, medium and large earthquake claims

For minor cosmetic damage, a full mandate may cost more than it could add, and a fixed-price scope review is often more sensible. Medium claims, where foundations or structural elements are involved, are where advocates most often add value. For large claims or rebuilds, the percentage tends to fall, but engineering costs, long timeframes and multiple experts make total fees significant, so a cap or tiered rate is worth negotiating.

A Christchurch-style example

Picture a home with foundation damage after an earthquake. The initial assessment proposes cosmetic repairs and limited relevelling worth NZ$140,000 in total across the natural hazard and private layers. After an independent floor-level survey and engineering report, the parties agree a foundation repair and full reinstatement worth NZ$310,000.

With a 7 percent fee on the full settlement, the advocate's fee would be NZ$21,700 plus GST, about NZ$24,955. With 15 percent of the NZ$170,000 uplift, it would be NZ$25,500 plus GST. In this case the uplift model costs more, showing that no structure is automatically cheaper. Add perhaps a few thousand dollars for the independent reports. All figures are illustrative.

Comparing advocates and avoiding pitfalls

Ask each firm for a written proposal setting out the fee base, rate, minimum, GST, disbursements and termination terms, then compare like with like. Look for experience with natural hazard claims and with engineering disputes, and ask who will attend inspections and meetings.

Steer clear of advocates who promise a rebuild, who suggest overstating damage or who demand significant payments before they have done any meaningful work. Be particularly careful after a major event, when demand is high and unsolicited approaches are common.

Questions to ask before signing

A few direct questions usually reveal whether a fee proposal is transparent.

• Which part of the settlement does the percentage apply to?
• Are engineering and survey costs included or extra?
• What happens if the claim goes to a dispute scheme or court?
• Is there a cap on total fees?
• What do I owe if I end the engagement early?

Earthquake claims can justify independent help, but only with a fee structure that fits the claim. expertdassure.com advises comparing proposals on the same base and budgeting for engineering reports from the outset.