Over-Cap Settlements

Cover under the relevant AMI policies included earthquake 'top-up' cover for loss or damage to the residential dwelling house that exceeded the statutory cap under the Earthquake Commission (EQC) Act for an earthquake event. An over-cap cash settlement is a settlement with Southern Response that included a payment to repair or rebuild the dwelling because the total cost to repair or rebuild the dwelling exceeded the EQC statutory cap at the time of $100,000 + GST for an earthquake event.

For the purposes of this Package, cash settlements that included payments for both a residential dwelling house and out-of-scope items not covered by EQC (see definition below) are classified as over-cap settlements. AMI policyholders who cash settled an over-cap claim with Southern Response prior to October 2014 may be eligible for an additional payment of certain professional fees and contingencies if they have not previously been paid those costs.

Please click here to check your eligibility.

How to register for the Payment Package

If you believe you may be eligible for a payment under the Package, you will need to fill out the registration form with as many details as you can.

Online registration form
Printable registration form

Once we have received your registration, we will need to verify your identity. We use a secure digital verification program called APLYiD. Click here to learn more about APLYiD. Once the identity verification process is complete your claim will be queued to be assigned to a Customer Relationship Manager who will review your claim and complete the calculation for any entitlement you may have.

Calculating payments under the Package for over-cap settlements

The first step in calculating the amount payable under the Package for over-cap settlements is to calculate the Base Construction Cost (BCC).
The BCC is, in principle, the highest construction cost estimate that was provided for in either:

• the Internal DRA created prior to the original cash settlement (DRA Construction Cost); or
• the Settlement and Discharge Agreement for the original cash settlement that was signed by both parties (SDA Construction Cost).

The BCC is the highest of the DRA Construction Cost and the SDA Construction Cost. This is the BCC figure to carry forward.

Step 2 is to calculate the Professional Fees Amount. The Professional Fees Amount will be the highest total monetary amount produced by two alternative calculation methods:

• Method 1: Total the Professional Fees specified on the DRA; or
• Method 2: Apply a standardised Package percentage to the BCC, being: 
  -  6% for group home builds damaged beyond economic repair (i.e. rebuilds);
  - 10% for architecturally designed homes damaged beyond economic repair (i.e. rebuilds); or
  - 10% for homes that were economic to repair.

Step 3 is to calculate the Contingency Amount. The Package provides for a Contingency Amount to be calculated from the combined total monetary amount of the BCC plus the Professional Fees Amount, multiplied by the higher contingency percentage either:

• specified in the DRA for the original cash settlement; or
• provided as the notional standardised Package percentage for contingency of 10%.

The Contingency Amount is the total monetary amount produced by the higher contingency percentage above.

Step 4 is to subtotal the Professional Fees Amount and the Contingency Amount to calculate a combined Professional Fees and Contingency Amount.

Step 5 is to calculate the Professional Fees and Contingency Allowance by making any adjustments to the Professional Fees and Contingency Amount that may be required due to the nature and terms of the policyholder's insurance policy and/or original cash settlement. 
Adjustments may be required to the Professional Fees and Contingency Amount if, for example:

• previous payments have been made by Southern Response for professional fees or contingency, either as part of the original cash settlement or since then.
• the original cash settlement was for market value under a Premier policy.
• the original cash settlement involved an insurance policy capped at a stated sum insured limit.

Step 6 is to calculate the Interest Allowance. The Interest Allowance is calculated on the Professional Fees and Contingency Allowance using the Ministry of Justice Civil Debt Interest Calculator from the date of the SDA for the original settlement until the date Southern Response releases payment under the Package.

Step 7 is to calculate the total amount payable under the Package. The total amount payable is calculated by adding together the Professional Fees and Contingency Allowance and the Interest Allowance.

There are many variations in the application of these basic principles to reflect circumstances relevant to each case and this is a broad outline only. Any offer of payment that Southern Response makes will set out how we have calculated our offer. You will be able to take this information and seek professional advice, and we strongly encourage you to do so.

Package payments are GST inclusive, if any. Policyholders should take their own advice about their GST and tax obligations.

Example Package calculation for an over-cap settlement

This is a general example only. The offer to each policyholder is subject to calculation and review of the specific circumstances, including how the claim was originally settled. All figures in this example are GST inclusive.

The Base Construction Cost for Mr and Mrs Smith's house rebuild was $500,000, which was disclosed in their DRA and in their SDA. The Internal DRA for their property (not disclosed) had an allowance for Professional Fees of $40,000 and an allowance for Contingencies of 8%. Mr and Mrs Smith settled their insurance claim with Southern Response on 1 July 2013 for $500,000.

The applicable Package percentage for Professional Fees for their property is 6%.

Recommendation to seek independent legal advice

We recommend you get legal advice regarding your options in relation to the Pre-October 2014 Payment Package. 

If you have engaged a lawyer to act for you in relation to your pre-October 2014 settlement with Southern Response, your lawyer should contact us regarding your participation in the Package. Any such communications should be addressed to This email address is being protected from spambots. You need JavaScript enabled to view it.

For further information about Package applications for over-cap settlements, please click here to view our Frequently Asked Questions.