Tower leads charge against quake homeowners

Tower is leading the charge against Christchurch quake-ravaged homeowners.

The insurance company's representatives began giving evidence this week in the second week of a case in the High Court at Christchurch.

It involves a dispute between Tower and homeowners Matt and Valerie O’Loughlin, who want full compensation for their red-zoned Dallington home.

Tower refuses to offer more than repair compensation, even though it is legally impossible to rebuild in a government red zone.

The sum deemed fair for a rebuild has changed during the course of the hearing as new assessments have been entered as evidence.

Mrs O’Loughlin told the court of her daily struggle to communicate with Tower officials. She resorted to taking notes of conversations.

The O’Loughlin case is one of several due to clog the courts for some time, lending support for proposals to set up an insurance mediation service.

Another pending court case involving Tower is a claim over a St Martins house. Tower says it can repair it for $330,000 but the owners question whether this is economical when the repair meets the policy standard of “same extent and condition as when new”.

Some of the cases involving Tower and other insurers before the courts include (summarised):

# A Hillsborough home subject to a s124 notice and said to be economically unrepairable. Red zoned (rock fall risk). Claim $650,000 for rebuild. Tower has offered $184,000 for notional repairs.

# A Somerfield home damaged in Sept and Dec 2010 and Feb 2011 quakes. Plaintiffs claim $663,000 to repair or rebuild. Tower has offered $127,000 for repairs.

# An IAG case – a Burwood home damaged in the Sept and Feb quakes and said to be a total loss and uninhabitable. Raises red zone issue. Claim $1.3 million to rebuild elsewhere. IAG has offered $275,000, less EQC payment for repairs. Alternative accommodation costs claimed.

# Tower – house in Kennedys Bush Rd. Parties agree house is a rebuild on same site. Plaintiff says rebuild cost including architect, engineer and surveyor fees is up to $2.475 million. EQC has paid. Specific foundations requirements (screw piles or timber driven piles) and issue whether garage damaged in quake account for much of the difference between parties.

# Merivale house, damaged in Sept and Feb. Plaintiff seeks judgment for full replacement value, architects’ fees and demolition/removal costs ($2.5 million). Tower accepts liability to rebuild and elects to contract the builder, says no breach of policy and no liability for damages. Plaintiff responds Tower has made election and house cannot be rebuilt as must now be elevated. Underlying issue is scope of rebuild and costs.

# Hillsborough property, not fully built when allegedly damaged in Feb quake. Full replacement of $1.3 million, less EQC sought. Tower says damage mostly confined to retaining wall and due to faulty workmanship, and wall not code compliant. House area understated in policy; how resulting rebate is calculated.

# Replacement policy over neighbouring New Brighton Rd houses damaged in Feb quake. Red zoned. Plaintiff says rebuild costs $564,000 and $781,000. Tower says rebuild costs are $264,000 and $266,000. Raises question whether plaintiff can claim foundation costs for this site although will rebuild elsewhere, and if not, what foundation requirements should be assumed?

# New Brighton house damaged Sept and Feb. Claim for rebuild on same site $800,000. EQC claim made but no payment. Claim Tower has failed or refused to pay.

# Burwood house in residential red zone, insurer offers repair costs only of $255,000. Plaintiffs claim rebuild cost $1 million, including $470,000 for foundations. They also say house damaged beyond economic repair.

# Burwood house and sleepout said to be damaged beyond repair in Sept quake and further damaged in Feb. Property red zoned June 2011 and sold for rating valuation. Tower offered repair costs (net of EQC) $104,000. Plaintiff says repair would require structure’s removal, new type 2B foundations at former elevation and extensive remediation of structure. Repair costs $764,000 said to nearly match rebuild cost elsewhere. Plaintiff wants Tower to pay for rebuild. Primary issue whether house repairable at economic cost.