A red-zoned Christchurch couple's claim for an insurance payout nearly $1 million above their home's rateable value was "wildly over" the most optimistic cost estimates, a court has heard.

Matt and Valerie O'Loughlin are disputing the repair value offered by insurer Tower for their earthquake-damaged Dallington home and took legal action seeking full replacement.

The High Court in Christchurch heard on Monday the O'Loughlins wanted nearly $900,000 - the estimated cost to rebuild on the Gayhurst Rd site - as well as $50,000 in damages.

The figure sought was yesterday reduced to $662,975 after revised rebuild costs from a quantity surveyor.

Loss adjuster World Claim, which took over the O'Loughlin's case last year, initially estimated the rebuild at $1.35m, but later revised it to $888,000.

In her evidence yesterday, Valerie O'Loughlin said her builder son-in-law had given an indicative rebuild cost of $1900-$2000 a square metre. In later correspondence with a quake support advocate, the estimate had increased to $2400 a square metre.

Tower's lawyer, Alan Galbraith, QC, questioned why that number was higher than her son-in-law's estimate.

"We all have dreams," O'Loughlin replied.

Galbraith said World Claim's rebuild estimate was nearly three times O'Loughlin's son-in-law's estimate and "wildly over the numbers you thought were very optimistic" in early 2012.

"There wasn't any chance at all Tower was going to persuaded by this sort of number, were they?"

The revised claim was now less than half the estimate from August last year, he said.

"My guess is the rebuild of our house probably would never have gotten to $1.3m," O'Loughlin said.

She said she did question the amount, but said building costs were increasing.

The couple disputed Tower's assessment that the house could be repaired. It was cracked, tilting and water had damaged the ceiling, the court heard.

Communicating with the company had been a "struggle day by day", Valerie O'Loughlin said.

"We were living there, we knew what the house was like. We feel that for [Tower] to contemplate jacking it up just was crazy," she said. Matt O'Loughlin said in his evidence that Tower "lacked compassion" in dealing with their claim.

Its claims manager, Stream, was "not in the slightest bit interested" in his opinion.

"I was made to feel like I was a puppet on string with no say in matters concerning my house and my future," he said. The court action had caused "much anguish" and affected his health, he said.

Tower agreed to pay immediately the $147,000 it first offered the couple for the repair costs.

- © Fairfax NZ News