Tower tries to reassure disenchanted red zone residents

Insurance company Tower has reassured quake-hit Christchurch residents it will honour contracts with people in the city's devastated red zone areas.

This comes after lawyer Grant Cameron said he had been approached by a group of "disenchanted" residents who were considering legal action against their insurers.

One disappointed Tower customer reported in a blog that the company said it would only cover the cost of repairs even though he had full replacement cover and his house was in a red zone.

Last week the Government announced Christchurch had been divided into colour-coded zones, including a residential red zone covering 5100 houses which cannot be rebuilt.

Tower Group managing director Rob Flannagan said today the company had received queries from a number of concerned customers and reassured red zone residents it would honour contracts.

He said it would honour them whether customers chose to accept the Government offer of purchase for the entire property at 2007 rating value or to accept an offer for the land only and deal with their insurers about their house.

"We understand that this is a complex and emotional decision for our customers -- especially those who have damage to their homes that we would repair under their policy if the land was not in the red zone," Mr Flannagan said.

The Insurance Council this morning said red zone residents should speak with their insurer or insurance broker when making a claim.

Each insurer had a different policy on what was a "complex situation", it said in a statement

Meanwhile, Christchurch and Waimakariri councils are in danger of having no property insurance when their policies run out on Thursday.

Civic Assurance, which is wholly-owned by territorial and regional authorities and insures most councils, will not be offering property insurance for any councils after June 30. It is facing quake-related claims for $750 million.