I guess I'll need a bridging loan [updated]

I'm a bit lost for words about EQC's latest rule change.

The Earthquake Commission charges a levy on all home insurance policies in New Zealand and covers the first hundred thousand dollars in damage to properties in the event of an earthquake, landslip, or other such event. There were warnings ahead of the Christchurch earthquakes that EQC was not charging enough to cover its potential liabilities and that it certainly was not well placed to manage any kind of major event; nobody paid much attention.

So anybody with home insurance in Christchurch has to deal with EQC. There's no obvious way of contracting around EQC to have a private insurer take on the things EQC normally covers. Where damage to a house is less than EQC's capped limit, you have a choice. Either you can project manage the rebuild yourself and submit the bills to EQC for payment, subsequent to their approval of a plan of works and costing, or you can have Fletcher's serve as project manager; Fletcher's is the default. While you can ask that Fletcher's use your preferred contractor in your repairs, some contractors now refuse to deal with Fletcher's. Where you let Fletcher's choose the contractors, there seems to be pretty high variance in outcomes.

We own an old weatherboard house with lots of character features; we wanted a contractor that specialises in that kind of home. We have full replacement insurance coverage. When our preferred contractor told us that he would not take on any more Fletchers-managed projects, we decided to go for an opt-out and let that contractor handle project management.

Now, EQC has changed the rules. Instead of our submitting the plan of works and proposed costings to EQC, followed by having the contractors bill EQC for the approved work directly, EQC has decided that opt-out owners have to pay their contractors directly then submit the bills to EQC for reimbursement.

EQC has a very bad history for paying on time. And if they decide, unilaterally and arbitrarily, to change the rules again mid-process, the homeowner is then stuck with costs.

We're now likely to need a bridging loan from our bank so we can handle our repair costs. And we'll have to hope EQC doesn't shaft us. But EQC is likely to shaft us.

At least we're likely to be able to get that kind of a loan. Or I expect we'll be able to; I'll have to talk with the bank.

This system stinks.

Update: Somebody called "EQC" in the comments at the Press site writes:

EQC has a number of changes to the Opting Out process with the aim of streamlining the process for customers and making it easier for them to take control of their own repairs, if they choose to do so. The flipside of EQC’s more hands-off role in these repairs is that we need to be clear about the customer’s responsibilities once they take on the role of project manager. To reflect this, EQC has produced some new customer information which including misleading wording relating to “reimbursement”. The revised wording places an emphasis on customers having the responsibility to manage invoices and EQC payments to ensure their contractor is paid on time. This is a standard part of the project management role, and it’s important customers know what is involved before taking the step to opt out of the Canterbury Home Repair Programme. As project manager, a customer running their own repairs takes on the risk that if invoices are incomplete, late arriving with EQC, or if some other complication arises, they may be required to pay a contractor upfront and be reimbursed. EQC pays on the 20th of the month following recpeit of invoice. As for Steve Brooks' comments that people not opting out will add years to the repair timeframe, the Canterbury Home Repair Programme has so far completed 18,000 full scope repairs - cusomters project managing their own repairs have completed a few hundred. But then Mr Brooks makes money when he persuades people to opt out, so he would say that.

I can't find anything on the EQC site discussing any of this.