Pair lead red-zone payout test case
Retired couple Matt and Valerie O'Loughlin find themselves uncomfortably at the centre of a landmark insurance case arising from the Christchurch earthquakes.
Their action before the High Court in Christchurch is due to settle one of the most vexed insurance questions to arise out of the quakes.
The case will look at whether an insurance company is entitled to pay only the repair costs of damaged houses in the red zone when such houses cannot be repaired anyway.
Many red-zoners have taken the Government offer of their property's rateable value, but people like the O'Loughlins, who believe their properties were undervalued, want their insurance companies to honour their policies.
The court is due to hear the case in early March in a week-long trial.
The O'Loughlins said their architecturally designed house in the hard-hit area of Dallington was damaged beyond economic repair in the quakes.
Their insurance company, Tower, was therefore obliged to pay them enough to fully replace the house and surrounds they had built 12 years ago, they said.
They were not comfortable about being in the limelight of a test case and would much rather be getting on with their lives.
The last two years had been a torrid battle with Tower and they had been left stressed and angry.
They were also claiming $50,000 general damages from Tower for "distress, inconvenience and mental anguish".
"We haven't got that much time left. Instead of doing things we enjoy like spending time with our grandchildren we have spent countless hours fighting our insurance company. We've been totally consumed by the whole thing and so much money has been wasted," Matt O'Loughlin said.
"Our lives have been on hold. We have relatives who were in a similar situation who are now putting down the lawn at their new property."
He said Tower had been difficult to communicate with and they had dealt with more than five Tower representatives.
"We didn't want a fight but we are not going to be run over by an outfit which says one thing in its policy and does another," he said.
Grant Shand, who is representing the couple along with international insurance assessors World Claim, said the couple argued it was untenable to discuss repair when the house could not, in reality, be repaired.
The case was the first to test the standard insurance stance on red-zone houses and would have ramifications for the whole insurance industry, he said.
Costings suggested it would take nearly four times the amount offered by Tower, including the Earthquake Commission payout, to replace the house on another section, he said.
The couple maintained that even if their house was not in the red zone it could not be economically repaired because it was too badly damaged.
Tower, in its court documents, says its obligation in the O'Loughlins' case is restricted to the cost of repair and claims the house is economic to fix.
In a statement, a Tower spokeswoman said the company could not discuss the O'Loughlins' case because it was before the courts.