Does Your Property Have A Shared Driveway?
Repairing driveway damage can be a complicated and costly affair for both you and your neighbours, as recently demonstrated in an insurance claim made by a group of neighbours in Whangarei.
In Whangarei, five homeowners each owned an equal share in a driveway giving them access to their homes. When a landslip damaged the driveway, the Earthquake Commission covered repairs to the underlying land, but did not cover the cost of repairing the driveway’s surface.
When the property owners made a claim to their private insurers to fix the surface, they each were required to pay an excess under their respective policy. In some cases, the excess for natural disaster damage was $5000, which was much higher than the 1/5 share of the cost of repair, so no claims were paid out.
Was this approach correct?
The homeowners complained to the Insurance and Financial Services Ombudsman, the watchdog for the insurance industry, who said that each individual insurer was able to rely on their policies and charge an excess for each share of the repair as they were separate claims under separate policies.
In response, a representative from the insurer noted that it had run a campaign about the introduction of the new excess in 2012 and this included advising customers about the new excess on the renewal of their polices. The insurer said that it was an industry wide change to balance “the cost of insurance for customers against the cost of managing natural disaster losses”.
The insurer noted that they did not have an obligation to specifically explain how the excess will operate in the case of a shared driveway and that it was up to a prospective purchaser to make proper inquiries into their obligations when purchasing a house with a shared driveway. The insurer also encouraged its customers to make sure that they read and understand their policy documents.
What do you need to be aware of?
If you are planning to purchase a property that has a shared driveway, you need to know how your insurance policy will operate in the event you need to make a claim. Most policies of insurance charge an excess per claim and in most cases it will only cover insured losses suffered by those recorded as the ‘insured’ in the policy documents.
If the shared driveway is in the form of a right of way easement, it is important to know what your powers, rights, and obligations are under the easement instrument. Most easement instruments will require the land owner giving the right of way and the land owner benefitting from the right of way to equally share the costs of repairing and maintaining the easement area. In such a case your policy will usually only respond to your liability, which in this example would be 50% as there are two separate owners who are to share equally in the cost of repairing or maintain the easement. However, some easements have different cost sharing arrangements, so it is important to understand their terms.
How can we help?
As the Whangarei property owners found out, having to make an insurance claim on a shared driveway can be an expensive and time consuming affair. It is important that you understand your obligations when purchasing a new property so that these sorts of issues do not come as a surprise. Our specialist Property Team are able to work alongside you to help you understand these risks and obligations, including what obligations you have under any easements that may apply to the property, before your agreement to purchase becomes unconditional.
The above information is of a general nature only. You should contact our firm for advice relating to your specific circumstances.
About Callan Wilson
Callan joined Saunders Robinson Brown in 2018. He is a member of our Property Team.