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aaron_and_nancy

Insurance/financial disaster - try to repair or build new?

aaron_and_nancy
5 years ago
last modified: 5 years ago

Hi Team,

So we bought a house that was built in 1969 (or at least that is when the application to build was submitted to Bundaberg Council). It cost $145 000 and it was in wrecked state with no doors or windows, no bathroom, no kitchen - it was a real mess. As my wife was studying we could not afford to borrow more so we put the $60 000 of renovations on credit and thought we would refinance when we were done. (house was bought in March 2017 and renovations were completed in September)

15K new windows and doors

10K solar cells and solar hot water

new kitchen and bathroom

interior stripped and painted and broken tiles removed and new vinyl tile flooring

At this point we went back to the bank (Westpac) and they said we had made a mistake renovating – that we hadn’t added any value to the property and they would not refinance us (despite wife finishing study and having full time job)

In October 2017 there was a mini cyclone in Bundaberg – our roof was damaged and the insurance (you guessed it… Westpac) and their assessor (A.J Grant) determined that the roof needed to be replaced.

A.J. Grant recommended to cash settle as they felt it was not possible to repair the roof and give a lifetime guarantee on their work.

The first offer was $43 000 (seemed like an enormous amount of money to replace a flat roof 108 sqm)

We got builders quotes and no one wanted to do the job – the issue is a new roof has to be built to code – and you cannot tie it down to walls built in 1969. It needs to be tied down into the cement slab of the house. This involved upgrades to the entire structure.

Insurance says only the roof was damaged so they only pay to repair the roof.

We complained and looked into the fine print on the policy- there is a caveat for engineering of up to 10% of the insured amount.

The next offer was $58 000

Still no builders wanting to touch it, no offers even coming close. Westpac even deposits the money with no paperwork or explanation.

We complain – they send it to their internal engineers – then we get an email saying not to worry A.J. Grant will do the work- lifetime guarantee. We pay back the money and sign a contract for the work to be done, Qbcc insurance on the building site - the works. One month later we are being told that A.J. Grant will not complete the work and we are back to being paid out. This time the offer is $66 000. On speaking to A.J. Grant they are saying they never agreed to complete the work and will not give even on estimate on how much it might cost.

This time to get the money we need to sign a legal release to get them out of any liability.

This process has taken 10 months.

So the question is – do we spend an unknown amount of money (hopefully not more than 100K) to replace the roof on our house.

Or do we take the loss, knock it down and rebuild a small new house on the block for between 150 and 200K

Either way we are taking a loss- but which one makes more sense?

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