The Earthquake Commission is considering the implications of a High Court case it lost over the claims limit for multiple damage to Christchurch homes.

But the EQC has not yet decided whether it will challenge the ruling in the Court of Appeal.

The court ruled the limit of $100,000 on houses and $20,000 on contents applies to each quake, not just the total loss for the year.

In a victory for homeowners and private insurers but a blow for the state, some properties are eligible for the $100,000 EQC payout more than once in a year because of multiple Christchurch earthquakes.


"EQC is making no comment on this at the moment while it reviews the High Court's decision," communications adviser Gordon Irving said yesterday.

EQC says about 110,000 properties have lodged multiple claims after two major earthquakes struck Christchurch in September and February.

Many of these, however, are for less than $100,000 for house damage and are unaffected by the decision which Prime Minister John Key has estimated could cost an extra $1 billion.

The decision means EQC has to pay out up to $100,000 on houses for each Christchurch earthquake, not just $100,000 on a house for the year. This means its exposure has risen and private insurers will not have to pay out so much.

The Insurance Council and New Zealand's biggest insurers asked the court to decide how much EQC should pay when homeowners faced multiple claims for damage totalling more than $100,000.

Vero Insurance, IAG New Zealand and Tower sought a judgment with the EQC and the council and, in an unusual move, all were applicants and none were defendants because all wanted to clarify the law to give certainty to Christchurch people.

The EQC pays out the first $100,000 damage to a house and $20,000 contents, then the private insurers pay the rest.

The decision does not affect the payout for land damage. This is not subject to the $100,000 limit but is related to section values in the area.

Chief High Court Judge Helen Winkelmann presided in the case with Justice Alan MacKenzie and Justice Forrie Miller.

"The question is how EQC cover responds to homeowners who have made more than one claim for damage suffered in more than one earthquake where such damage exceeds, in aggregate, $100,000," their written decision said.

The court said the council represented 98 per cent of insured houses in the earthquake-affected area and said it gave the case high priority.

"Because of the importance and urgency of this issue, the parties have co-operated in having the proceedings readied for hearing as quickly as possible, having regard to the complexity of the issues.

"The court has been able to co-operate in arranging an early fixture, before a full bench," the decision said.

The parties sought clarification about whether EQC should pay out $100,000 for each occurrence or damage to a house or no more than $100,000 in total for all damage.

Private insurers were yesterday expressing some satisfaction at the decision although one said it was not a case of winning or losing but simply seeking clarification on the law.

After Christchurch earthquakes:

* 368,000 claims went to EQC by end of June.

* 313,000 from September and February quakes.

* 110,000 properties with multiple damage.

Source: High Court at Wellington decision