The Insurance Council says the interim judgement in the case between Tower Insurance and a couple in the Christchurch red zone brings certainty and clarity about properties in this area.
Tower was taken to court by Matt and Valerie O'Loughlin who said the company should pay for a full rebuild of their house because it is in the red zone.
While the judge ruled just being in the zone was not enough to claim a loss, he said the amount offered by Tower was too low.
Insurance Council chief executive Tim Grafton said the ruling should clear up any confusion other red zone claimants in a similar situation might have.
He said claims have to be based on actual physical loss or damage to the property, not on red zone designation.
Insurance claimant feels vindicated
The woman who took the claim against Tower Insurance to the High Court says she feels vindicated by the judge's findings.
Justice Asher ruled that Tower must pay for a replacement or new home for Matt and Valerie O'Loughlin outside the Christchurch red zone.
Lawyers for the O'Loughlins are now to talk to Tower's lawyers to see if an out-of-court settlement can be reached and the judge is calling for further submissions.
Mrs O'Loughlin said she's pleased with the ruling as it shows she was correct to fight for compensation.
Tower said the decision clarifies issues around payments to home owners in the red zone and will affect dozens of other claimants.