Tower told to pay quake damage loss

Insurance company loses case taken by a red-zoned Christchurch couple.

Tower has failed in attempts to short change a Christchurch couple.

In Christchurch High Court, Justice Raynor Asher found Tower’s assessment of repair damage fell short of the insurance policy obligations to Matt and Valerie O’Loughlin.

In particular, the judge ruled Tower’s assessment involving an untried low mobility grout method for repairs to foundations was not in accordance with the policy, might not obtain resource consent, and might well encounter serious problems.

“The amount Tower has chosen to pay has not been shown to be the replacement value and does not equate to the actual cost of bringing the house back ‘to the same condition and extent as when new’ under the insurance contract," Justice Asher said.

The cost of rebuilding the house on the existing site is $620,000, and on a sound site in a comparable position elsewhere is $540,000. Justice Asher says the payment from Tower should reflect the $540,000 figure.

He says the O’Loughlins have chosen not to rebuild on the same damaged red-zone site and therefore the payment must be based on a good, new site.

There appears to be some irony in this aspect of the judge’s ruling because Tower had argued that its payment should reflect the cost of repair on the red-zoned section, even though it was never an option in reality.

Justice Asher ruled that the government’s red zoning of their property could not be taken into the assessment of their financial loss. Tower’s payment should only reflect their physical loss.

Justice Asher stopped short of determining the exact quantum of the payment and of costs, calling for further submissions from the lawyers.

Other dissatisfied insurance policy holders due to bring several cases before the court are likely to embrace the findings in their own challenges.