“As New” – AMI Insurance Policy


In the recent decision in Turvey Trustee Ltd v Southern Response Earthquake Services Ltd [2012] NZHC 3344 dated 11 December 2012 the High Court (Dobson J), in the context of a summary judgment application was required to interpret, AMI’s Premier House Cover policy; particularly what was the meaning of the obligation on the insurer to rebuild the house to an as new condition using building materials and construction methods in common use at the time of rebuilding.

The property at issue was an Edwardian masonry villa at 23 Aynsley Terrace.  After discussing the relevant Australian cases (Spina v Mutual Acceptance (Insurance Ltd) and Colonial Mutual General Insurance Co Ltd v D’Aloia) the Court  decided the insurer’s obligation is to meet the cost of constructing a new house of the same style and quality of materials as the property insured, subject to the requirement that the materials and methods are in common use in erecting Edwardian style villas and the requirement for reasonable consideration of substitute materials  or methods of construction where they would not affect the quality or character of the replacement structure.  Justice Dobson in paras [25] & [26] stated that common use is likely to be made out at a relatively low threshold.

The decision was limited to interpreting the particular AMI policy and the Court noted that each claim would need to be determined on a case by case basis.