Evidence is being called in the High Court in Christchurch by Tower Insurance, which is the subject of a legal fight from one of its customers.
Valerie and Matt O'Loughlin are taking the insurer court over its opinion that their earthquake-damaged home in the suburb of Dallington can be repaired.
By government order, the retired couple have to move out of their house by July this year and say the $337,000 settlement offered by Tower is not enough to replace their home 'like for like' in a new area.
On Friday, Tower's general manager for earthquake recovery told the court that there was nothing preventing red-zoned properties from being repaired or rebuilt.
David Ashe said the Government's offer to buy these properties was not compulsory and the Christchurch City Council was still willing to provide resource consent for building work in the red zone.
However, Mr Ashe said Tower was willing to provide cash settlements to residents in the red zone, because this was what they were asking for.
He said the insurer's first option is always to negotiate with its customers.
"Many of our claims are resolved with compromise. Tower has no desire to end up in court with customers like the O'Loughlins, who have endured the earthquakes and want to get on with rebuilding their lives.
"Unfortunately, the costs advanced on their behalf in this case far exceeded anything that could form a reasonable basis for resolution."
Mr Ashe said it was impossible to deal with the loss adjuster World Claim hired by the couple because it was asking for a sum of money well in excess of anything Tower had seen for similar properties in Christchurch's red zone.
Meanwhile, a surveyor employed by Tower Insurance to work out how far the land under the O'Loughlins' property had sunk admitted it may have subsided further than he estimated.
The extent to which the level of the land has changed is important, because it determines whether or not it is possible to rebuild on it.
Surveyor Lester Ironside told the court on Friday he was not able to say with certainty how far the property had slumped, due to a lack of reliable surveying marks.