Claims firm keen to see payout rules tested in court

1:25 pm on 24 April 2012

A claims company representing homeowners in Christchurch's red zone has welcomed a legal opinion that indicates some residents may be entitled to full compensation on their homes.

Red-zone properties are on land that's so seriously damaged, its unlikely to be rebuilt on for some time.

Many of the actual homes are not badly damaged, however, and some insurers say they'll only pay the cost of repairing the houses, not the replacement cost.

The legal opinion has come form insurance specialist and Labour Party member, Duncan Webb, a partner at Christchurch-based law firm Lane Neave.

He says the creation of the red zone has deprived homeowners of their land, and if for all practical purposes a property is lost, the owner may be entitled to full compensation.

Colin McNabb of Pro-claims, who is negotiating insurance claims for 20 homeowners, says the legal opinion is helpful.

He says that if it can be formed into case law, it would alleviate the stress many of his clients are under.

Labour Party earthquake recovery spokesperson Lianne Dalziel says she will be sending the legal opinion to the New Zealand Law Society in the hope that someone in the legal profession will test the issue in court.

Ms Dalziel says she'll also write to the Prime Minister, urging him seek a declaratory judgement from the court - so everyone knows where they stand.

Insured owners of property in the red zone can either sell both their house and land to the Government at the 2007 valuation or sell just the land and claim through private insurance for their house

Insurers liable for repair cost only, say company

The head of the company charged with settling AMI insurance claims in Christchurch is sticking with its present position despite the new legal opinion.

Southern Response Earthquake Services was formed by Government company to settle $1.3 billion of AMI claims in Christchurch.

Chief executive Peter Rose says the company takes the view that if a house is repairable, only the cost of repairs will be offered, even if it is on land in the red zone.

He says the company does not cover damage to land, and the zoning a property is given has nothing to do with insurers.

Brooklands homeowner Sharon Spyve says she and seven neighbours are losing a total of $2.5 million and the families cannot take that scale of loss.

"If we have to leave our land - which we don't believe we do - all we want is to be able to replace what we've got."