insurance, moving on and choices

[george]

so we had a number of earthquakes.

My house was structurally damaged. the land has dropped closer to the water table and the land is more prone to flooding from sea level rises and river inundation, although it never has. the sewerage is not perfect but its working and if necessary i could set up a composting sewerage system.

I live next to a huge area of land where thousands of houses have been demolished. some of these houses were livable, but for various reasons people couldn't stay. Such a waste. The government has not decided what they will do with the land, although its a fantastic environment and a natural drawcard.

I live in a really nice community where most of us know each other, we've had a few people leave and enter and it will take time for our area to adjust as there have been some people enter who cause a bit of trouble. Over time the people I know will leave through natural attrition and don't know what will be left. in the meantime, I belong here and want to do what I can to rebuild our community. On saying this, we're in a state of transition and if I look at it as solely a financial decision I wouldn't build an expensive home here.

So I built the house a few years before the quakes. Planning permission limited my choice and I built a 4 bedroom basic but solid warm home built for sun and function. I would have preferred to build two flats. But as I couldn't anywhere in the city I built a family home which would be easy to rent out and live in. They've just changed the planning rules and I can now build two flats on this site.

So anyway its been a long journey following the quakes, i could write a book about it but the insurance companies are starting to acknowledge I have structural damage which is expensive to repair. if they do repair it, it will be according to the old building standards and therefore not the solid home I had. They may even rebuild, but we'll see.

Some people around here are using their insurance to rebuild, others are selling their home as is where is uninsured, unfixed and moving with their money.

I am looking at all my choices if its not a rebuild.

1. let them repair - result is a house which is not the solid home I had. selling, well any buyer would know the background and use it to their advantage. but its an easy option.

2. live in my house as is where is. take the money and loan it to a young couple I know who want to build an eco friendly unique home which they can't build if they rely on banks, then when the money is returned, build a new solid smaller home which is higher. I don't want the cash as it complicates things. and I personally don't want to benefit from being a landlord. its would be like a rent to buy.

3. live in the house as is where is , take the cash settlement. and when the market has settled (I believe its at its peak due to the rebuild and other reasons) build two flats or build one flat and live in it for a while and build the other one later. or a big studio, but thats an option for later on.

I'm not sure what the details of any cash settlement will be. but I now know it would be significant and simply saying repair, good luck insurance companies, calling their bluff (prove to them they're dreaming) is now not the only option.

People who share on this website think outside the square, and I've always done things differently. Part of me really likes the idea of taking the money, but in my mind I had taken the risks in the past, I was secure. Although in reality, as those effected by the financial crisis would say. There is no such thing as security. We need to adapt to move forward and live according to our own values.

after living in limbo for four years, i don't want to plan too far ahead, but one can't help contemplating all the options.

and that is my story

I guess underneath it all I can relate to Darryl Kerrigan form the Castle movie. we've had our own battle here, thousands of us, its about understanding what really matters, and at the same time securing our financial future in terms of keeping our options open. Its the serenity.

[George the original one]

To make sure we understand...

You like the location and intend to stay, so the question really becomes one of financing reconstruction & selecting the appropriate reconstruction plan.

As I recall, you're FI, so have you considered working as a means to finance the reconstruction until a settlement is reached so as not to deplete your own resources? The idea being that way you could get what you really want without being dependent on the settlement terms.

[george]

George the original one.

Thanks for taking the time to post your thoughts

You're right. I'm FI, I could finance the reconstruction. but we're in the middle of a huge rebuild so everything is really expensive and my house is quite livable - its not unsafe. Its cracked, uneven and some doors and windows don't open and shut. I guess I ring fenced the house and don't want to touch my finances. I hadn't actually considered rebuilding now myself.

I definitely like the location and want to stay, its just not a good time to build and theres a huge question mark about the area so not a good time to make a decision re type of build. I used to be one of the best houses in the street. i kind of like being one of the worst from an investment point of view.

I like your thinking. The idea of not being dependant on their settlement terms. they tried to settle us years ago for a fraction of the cost, calling it a cosmetic repair. In my situation, having their answer and knowing all my options will be my form of moving on. then I can do what i want when the time is right. if i did rebuild now, it would reduce my negotiation power. I'm pulling the reluctant insurers on still, but we've made significant progress.

about working, I have considered it, but its not the finances that are effecting my choices at the moment. I've had the opportunity to work and did for a while. but I live a rather full simple life, and at the moment its suits me. I may work in the future when life isn't quite so full. doing nothing is something that wouldn't suit me.

[george]

and the other possibility is I say yes to a repair, they pull the house apart and it turns into a rebuild, which does happen and they've told me it could as they are having to rebuild a chunk of the foundations as well as relevel etc. In which case I would be in temporary accomodation and the existing house would not be an option as it would be pulled apart and I'd have to design a new house. to replace, quite different to this one to meet the changing environment but not the smaller house I would build if I had a choice.

so much to consider.

[SimpleLife]

I'd sell and move to a lower cost area where you come out ahead. That is unless you are attached to friends and such in the area. Put a monetary value on the area, is it worth that much to you to stay? Say if you gained 100K by relocating, would it be worth it losing 100K for you to stay?

[george]

Thanks simple life you're right 100k is the amount I think I would lose if they simply repair. and over time even more. sobering thought.

have to admit I am attached to the area. friends, family, fantastic neighbours. and I really feel like I belong in this environment. Seeing native animals and vegetation return is a privilege. I've lived elsewhere and never felt like I belonged like I do here. I can go for a walk, a bike ride for hours and get lost in the bush. I'm also close to the city, the hospitals etc. The country has now arrived on my doorstep, and I've always wanted a rural lifestyle. best of both worlds.

One of the options is to use the money to buy or build a house elsewhere which meets the new building code etc on safer land. it would be like an insurance policy for my future. That house would be insured, so if I live in this broken house for a while, as is where is, no insurance and there is another quake I have a home. I could rent out the new house. Problem is I never buy or invest in something that I'm not passionate about.

So If the couple build their environment friendly unique house, I might do the same once they've completed it and who knows when it is built, if its not too far away in terms of distance, I might live there myself and sell off this, as is where is. I might pay them to build it for me.

theres so much to consider it kind of blows my mind. I know it'll all work out well in the end. thanks for posting.

[Riggerjack]

OK, foundation damage. Where are you? What kind of soils? How old is the house?

Generally, foundation leveling is done by slab jacking, or by firing supports into the foundation, then hydraulically jacking up the foundation. In the first, they put a hole in the slab, then inject concrete under pressure. The slab raises, and then the concrete sets. In the second, your house goes from being supported by the footing, to being supported by the anchors.

If it were me, I'd repair regardless. Just because there are too many local distressed sales. No need to join them. Then independently make the stay or go decision. Maybe repair, sell, buy in the same neighborhood, another house in need of the same repairs but higher elevation. Leverage the knowledge you get repairing your house into an upgrade in your own neighborhood.

As to the young couple... If I'm taking on risks that banks won't, it is on my own passion projects. Financing someone else's passion project leaves you exposed to such a wild variety of risks you have no way to mitigate. Couple fails, passion fails, project fails, plus all the normal construction speculative risks. And the reward is?

[george]

I'm on land in an area that has been categorised as the most damaged soil. its sandy. they've drilled the site, but haven't shown me the analysis. Each site is quite different. I have a couple of questions about the soil which still need answers. like soil bearing capacity. apparently they're supposed to do this before they make decision about lifting the house.

the house is 10 years old. the builders who visit tell me it is well built. which is why its still livable despite the shaking.

visibly I've had a huge amount of high pressure liquefaction ejected from the damaged side of the house. there may be a gap under the house which they will test for once the house is pulled apart.

In the last year to 18 months the house has stopped moving. so it took about 18 months for the land to settle down.

the second option is apparently my repair technique, although that is to be confirmed. Its on the top level of the allowable max level (within a few mm) because its so tilted. and the cracking raises concerns for the tilters as the cracks are right on the margin in terms of size. they are also all over the place in different directions. this is a issue for insurers as there is a significant cost to get to this stage of releveling, part rebuild and they lose it if it becomes a rebuild.

the young couple, I've watched them both grow up, extended family. whenever something needs fixing they're always the first. I've seen them take on small projects, overcome challenges. If I help them I benefit because they are part of my future whatever happens. Even if this doesn't go ahead, I will give them a small hand up. you're right about cautioning. if it went wrong I would not want our friendship to be effected, it would be a business proposition, an agreement with very clear terms. I have done this sort of thing before, only not with them.

building in my neighbourhood, like your thinking. Part of me wants to buy a section here and build using the new technology. It is very rare to have an earthquake here (every 7000 years of this magnitude in this location). I just hope its a rebuild and I can do it on this site.

you are right, whatever happens I will not rush into a fire sale.

Thanks for your thoughtful questions. as you can tell, I don't have all the answers now, but its so nice to be in a situation where whatever happens I know that they recognise it is severe structural damage and I will have options. have been moving in circles with the insurers to get to this point. but am very lucky I haven't had to agree to their prior plans. many have given in, to their regret. To be fair the insurers are learning, just like us.

[SimpleLife]

Thanks simple life you're right 100k is the amount I think I would lose if they simply repair. and over time even more. sobering thought.

have to admit I am attached to the area. friends, family, fantastic neighbours. and I really feel like I belong in this environment. Seeing native animals and vegetation return is a privilege. I've lived elsewhere and never felt like I belonged like I do here. I can go for a walk, a bike ride for hours and get lost in the bush. I'm also close to the city, the hospitals etc. The country has now arrived on my doorstep, and I've always wanted a rural lifestyle. best of both worlds.

One of the options is to use the money to buy or build a house elsewhere which meets the new building code etc on safer land. it would be like an insurance policy for my future. That house would be insured, so if I live in this broken house for a while, as is where is, no insurance and there is another quake I have a home. I could rent out the new house. Problem is I never buy or invest in something that I'm not passionate about.

So If the couple build their environment friendly unique house, I might do the same once they've completed it and who knows when it is built, if its not too far away in terms of distance, I might live there myself and sell off this, as is where is. I might pay them to build it for me.

theres so much to consider it kind of blows my mind. I know it'll all work out well in the end. thanks for posting.

It sounds to me, based on your posts, that you want to stay but not considering the cost. Reading between the lines, IMO you logically realize moving would be the most financially prudent thing to do, but you are trying to find reasons to stay regardless of the cost.

Personally, I think staying in the area would be a mistake. You will likely keep having issues there, and will eventually have to move to protect yourself financially and stop the bleeding. If YOU don't move, it is likely that at least some of the very friends that are keeping you there will eventually. I know it is tough to make a decision like this, but sometimes you have to cut your losses short and rebuild elsewhere.

Otherwise you end up in an "abusive relationship" type of situation, where you've invested so much time and tears into a situation, that if you leave "now" it will all be for nothing, when in reality, the best thing to do is to cut your losses short and move on. Hope that helps.

[george]

Thanks Simple Life for being so honest. I agree. moving may be the most financially safe thing to do. we all have a different psyche. If I left it would not only be a fire sale, I would feel a huge sense that I have abandoned the place I belong.

whatever happens, I agree I do need to protect myself.

one of our issues is because our area is so broken and we have no answers we have not been able to grieve. I look around me every day and know what I see will in the near future all be gone. I want to be able to grieve for my area and then be a part of its reconstruction. Part of me needs to live for the moment, the now and for me it is here. whether I leave or stay there will be many tears. the red cross says we normally grieve three years after a natural disaster and for us four years of waiting is too long. But we're okay.

I am thinking about it all though, and know that there are many options. in the end I will get it all sorted.

thank you again for your honesty, your thoughts and your time.

[george]

and one day I will travel both through this country and overseas, renting my house out. this is a really popular rental area. due to family commitments I can't at the moment but in the near future this wouldn't be an issue and renters would have quite a different set of requirements compared to buyers. it would need to be insurable for them though. no question.

[SimpleLife]

Thanks Simple Life for being so honest. I agree. moving may be the most financially safe thing to do. we all have a different psyche. If I left it would not only be a fire sale, I would feel a huge sense that I have abandoned the place I belong.

whatever happens, I agree I do need to protect myself.

one of our issues is because our area is so broken and we have no answers we have not been able to grieve. I look around me every day and know what I see will in the near future all be gone. I want to be able to grieve for my area and then be a part of its reconstruction. Part of me needs to live for the moment, the now and for me it is here. whether I leave or stay there will be many tears. the red cross says we normally grieve three years after a natural disaster and for us four years of waiting is too long. But we're okay.

I am thinking about it all though, and know that there are many options. in the end I will get it all sorted.

thank you again for your honesty, your thoughts and your time.

Absoluteley, anytime. Sometimes you need a detached person who can be completely unbiased and objective since they don't have the emotional attachment. Please do update us on what you decide, and if you need to talk more, by all means either post here or PM me. I know this is an extremely difficult situation for you to be in, and if I were in your shoes, having someone who will listen one on one and allow me to talk about the issue until I am sure on what to do would make a huge difference to me. By all means, I have nothing but time for you. Let me know if you want to talk more.

[george]

simple life

thats right, having a detached persons opinion really helps. when I have an idea of the options will post it. its difficult to put everything into words, I'm trying to keep focused. although...

this morning I spoke with a couple who had to leave their land. they selected a very visable piece of land which had 10-15 houses on it and have turned it into a park, they're there most days working in it. its only temporary as we're waiting for a govt decision regarding the use of the land. they just want to stay connected and want people to enjoy it. Its interesting because there are a number of people here just trying to work our way forward. I have been organising small events in the community, proceeds to charity and am trying to do the same thing, create positive memories in this area. there is so much potential here in terms of rebuilding our community, it's fantastic.

really tempted to put a plan together for our area in terms of joining disparate volunteers who are doing different things that have the same outcomes. I've done this sort of thing before (create change through synergy and vision) but this is for the future.

you see thats the thing I haven't really pointed out, many people had no choice but to leave their land, and when things settle down they will visit and we want them to feel this is another home for them.
thanks again for listening. its really helpful to put it all out there and get feedback. Things are a bit sad here at times, but they're really good at times too. When we see the news we see real pain and distress, we're fine.

[Riggerjack]

The purpose of a foundation is to hold your house away from the ground (water and rot) and hold it level. It's not doing that. Releveling it should fix most of your issues, but if it has big cracks, it could be structurally compromised.

I would look at repairing it like this:
Dig out to bottom of footing, inside an out.
Clean concrete
Use a product like Simpson's crack-pak. An injected epoxy. This will seal the cracks, so no water gets in to attack the reinforcing steel in your concrete, and bond the separate pieces together. Good stuff. This is a great time to upgrade your seismic bracing.
Relevel the house.

This would get your structure back. But then there is appearance. I would use a stone veneer to cover up all the epoxy/cracks. Once relevelled, your doors and windows should be fine. If not, you have been using them when they weren't right, long term. You can get a carpenter to pull the doors and windows, then reset them.

There, now all repairs are done, with a nice picture album of all the work done. Sell the house, buy another in the same neighborhood, but higher elevation, and repeat. You have improved the area (by fixing your house) propped up property values, and saved 2 houses from destruction.

This should be way cheaper than 100k for the repairs.

[george]

very interesting Ripperjack

I like the option of living in it, doing what you say in a few years when cost decrease. it sounds like its not such a big deal.

the process with the insurance company is a long way off complete. we've now moving from a government org to our private insurance company who has a really good reputation. will see what the final offer is from the insurance company.

Private insurers are keen to settle quickly and will discuss a number of options. although I'm in the process, I know this is a big expensive risky job because insurers have to return the house to pre quake standard. At this stage the govt has costed it at 65% of a rebuild. and that is without the contingency private insurers build into it. and insurance have a much more thorough process and pick up more damage.

I feel like I have a much better idea of the options now. Yesterday i went for a bike ride and spoke with a lady in a similar position. she said those who have been transferred to private insurers in her area are going for the as is where is option and pointed out the houses.

the land plus, as is where is, uninsurable house is worth the land plus 1/3. so if its a rebuild you're guaranteed to profit. But if its a repair it depends on the numbers and what you can live with in terms of loss and lifestyle worrying about liquefaction, flooding in future.

you never know what you'll do until the final offer is on the table

[Riggerjack]

People tend to build cities where the water is. Along coasts,rivers and lakes. This is also where the silt is. Sand or clay plus water means you will have soil liquefaction. Move away from water, or onto better drained subsoils, or just lift the house again next time.
This is nothing insurmountable, just a lot of work. The ERE DIY method would be to use brachets you made yourself and bottle jacks and a water level, but you have both money and insurance, so I would use one of those to get someone else to do it. Digging sucks, but digging in confined spaces sucks so much more! In the end, you should have your house intact, or just livable plus a check from the insurance company.
That is another option not explored. Take the check from the insurance, and only fix what bothers you. Doors and windows stick? Pay a carpenter to pull and reinstall them. Up to you, some people are bothered by slanting floors, but billions of others are not.

[Riggerjack]

And everywhere has earthquakes. Some more than others, me more than most. You said this isn't common where you are, so does stressing over it make sense?
There are things you can do to make a new house more earthquake resistant, but there are no guarantees. The house you have made it thru OK. Odds are very good you won't have to deal with this again.

As to waiting on insurance, you are there, and have the details, but I would contact some contractors, get references and at least 5 bids, then present the 3 highest to my insurance agent. I never found waiting for someone to get to me to be as effective as me getting to them. You are the one in the insured damaged house. It's up to you to get that resolved. From a paper pusher's standpoint, a claimant waiting is a solution, not a problem.

[george]

you're right Riggerjack, I need to be proactive. I've been schooling myself up. the private insurer will do another engineering report and a geotechnical report which will provide lots of useful info. they will prepare their strategy. I would only get prices when I have their final repair strategy and I could abut it/ compare it with the govt reports, strategy. Here its the insurance company that project manages, because they take responsibility for the contractors work.

as for earthquakes, you're right. there are all sorts of natural hazards, its more likely to be a fire, an uncapped spring that gives me a surprise that I would want to be insured for. and it costs me $1300 per year. this is the first claim my family has ever made in over 100 years. It is very unlikely we would have another such event and I am prepared to bet on it. Insurance has benefits, it also has costs.

the good thing about your being in a quake zone is you plan and build for it, you have the knowledge. The more we know, the more rational we act and prepare.