A Christchurch couple who have launched a landmark legal case for red-zoned home owners in the earthquake-battered city say their insurers are "obligated" to give them a full payout.
Matt and Valerie O'Loughlin have taken insurers Tower to the High Court after being disgusted with an offer on their quake-damaged two-storey home at Gayhurst Rd in the badly hit suburb of Dallington.
Red zone land cannot be rebuilt on and the retired couple believe their house is so damaged they should be compensated to build a new home on another site.
But Tower Insurance Ltd is offering to give them only $337,00 to fund a "theoretical" repair job.
A packed public gallery today heard opening submissions from the couple's lawyer Grant Shand.
The O'Loughlins wanted "the ability to have a replacement functional quality house", which was what they believed their policy entitled them to, he said.
Their current position meant they could not afford anywhere near a replacement quality home.
Mr Shand said a new house, which would be similar to what they had, could cost between $500,000 and $700,000.
The rateable value of the house was $420,000.
Justice Raynor Asher asked if they could then go out and potentially buy a better home than the one they had before the quakes. Mr Shand said they "theoretically" could.
Emails from Tower said it considered the property could have been repaired had it not been located in the red zone.
Mr Shand read from the couple's Tower insurance policy which promises to provide full replacement "regardless of cost" up to the same square-metre area.
"That's what the O'Loughlins expected, that's what was sold to them," he said.
It could be replaced at the same site, or at another site of their choice.
But it was critical that the full replacement value would mean the new property would be in the "same condition and extent as when new."
"That is Tower's ultimate obligation," Mr Shand said.
The couple has until July to get out of their home, which will then be demolished.
"They have no house to go to," Mr Shand said.
He said Dallington was a "particularly hard-hit land area", where most people had already moved out, and houses were being demolished regularly.
The case, which started today, is expected to conclude next week.
Justice Asher has asked to visit the Gayhurst Rd property this afternoon, along with both legal teams, court staff, and the O'Loughlins.
- Kurt Bayer of APNZ