Insurer must replace red-zoned house
A Christchurch couple appears to have won the battle to have their insurer rebuild their house, but lost the the war to give all red-zoners a similar deal.
The High Court has ruled Tower Insurance should pay Matt and Valerie O'Loughlin the full replacement value of their Dallington home after the pair disputed their provider's claim it only needed to pay $197,000 for repairs.
However, Justice Asher stopped short of a landmark decision that could see all red-zoners successfully argue for the full insured value of their properties.
He ruled that "Tower is bound to make a payment for the full replacement value of the O'Loughlins' house on another site, calculated at its option on a rebuild or replacement basis".
Tower's proposed repair method of injecting a grout into the damaged concrete base of the house was not in line with its policy to restore the O'Loughlin's house 'to the same condition and extent as when new", the judge ruled.
"[It] may well encounter serious problems and not secure a building consent," the decision said.
"The amount Tower has chosen to pay has not been shown to be the replacement value, and does not equate to the actual cost of bringing the house back 'to the same condition and extent as when new' under the insurance contract."
Counsel for the O'Loughlins had argued because the house had been red-zoned it was, by definition, not repairable.
However the judge found that "the creation of the red zone did not constitute or cause physical loss or damage ... to the O'Loughlins' house".
If Justice Asher had ruled the zoning itself caused loss, it could have triggered a flood of red-zoners arguing repair settlements from their insurers were invalid, and policies should be paid out in full.
While ruling Tower pay full replacement, Justice Asher did not enter a judgement for the plaintiff (the O'Loughlins) or the defendant (Tower).
The O'Loughlins' had sought $620,000 in relief, but the figure was based on rebuilding on their red-zoned Dallington site and should have been calculated for a "sound site" elsewhere at a maximum of $540,000, the judge ruled.
Justice Asher asked for submissions from both parties to determine general damages and relief.