A recent contract works claim for earthquake damage to a driveway was subject to an excess of $10,000. Depending on the contract terms the builder may have to pay it.
In this case, a new home was under construction and nearing completion when an earthquake struck, causing damage to the driveway that needed to be repaired.
The way excesses for damage from natural hazards are calculated varies across insurers. It could be a percentage of:
A. The total insured contract value, or
B. The value of the work done when the damage happened, or
C. The value of the damage
All will be subject to a minimum excess, and this and the % applied will depend on the earthquake risk in the region you’re building.
Because the home was nearing completion and the excess was calculated as a percentage of the work done at the time the damage occurred, the excess worked out as 2.5% of the approximately $400,000 spent up to that point. That’s an excess of $10,000, which was more than the cost to fix the damaged driveway.