The first civil case against an insurance company over earthquake repair bills has begun in the Christchurch High Court.
Matt and Valerie O'Loughlin are disputing an offer from Tower Insurance to pay for the repair of their earthquake-damaged home in the suburb of Dallington and not its replacement.
The O'Loughlins say the offer from Tower to rebuild the house cannot possibly be legal as it is in the red zone, which means the land can't be rebuilt on.
By government order, the couple have to move out of their house by July this year and say the $337,000 settlement offered by Tower not enough to replace their home 'like for like' in a new area.
Their lawyer, Grant Shand, told the court on Monday it would be illegal to try and rebuild in a red-zoned area and Tower is sticking to its offer of a repair job because it is cheaper to do so.
"They are left in a house that's not going to have any work done to it, that has real uncertainties about services, that is not insurable and there's hints that that CERA (Canterbury Earthquake Recovery Authority) may well compulsorily acquire these houses. They're not left with a functional house."
Mr Shand said the couple will need twice the amount offered by Tower to buy new land and replace the home and it is the company's "ultimate obligation" is to honour the full replacement policy they were sold.
But the lawyer for Tower Insurance, Alan Galbraith QC, said the O'Loughlins are over-stating their claim because it includes substantial foundation repairs which, he said, would not be necessary in a new home on new land.
Court officials visited the site on Monday following a request from Justice Asher, who is hearing the case.