An IAG spokesman said EQC had taken the approach that it would not pay the actual cost of overcoming land damage through foundation enhancement on the basis that this is not 'land repair' even though it cures land damage by over coming it.
"We disagree with this approach and how these land payments have been calculated and due to this we have issued legal proceedings against EQC.
"A legal ruling will confirm EQC's liabilities and private insurer's recoverable costs in this situation, and help all parties avoid such confusion in future."
Tower chief executive Richard Harding said he believed court action was now the only way to create clarity for both private insurers and EQC.
"Despite repeated discussions with EQC, we have failed to agree how to treat these costs. The private insurance industry needs clarity and a High Court ruling now seems the only way forward on this particular issue.
Harding said the court action would not prejudice or impact on customer settlements.
"We are simply seeking to have EQC fairly reimburse Tower for costs incurred responding to ILV [ increased liquefaction vulnerability] in settlements already reached."