A landmark court decision could mean higher payouts for Canterbury homeowners who are yet to settle earthquake claims.
The Court of Appeal last year ordered Southern Response to pay a Christchurch homeowner an extra $300,000 in costs associated with rebuilding.
The money is for out-of-scope work such as engineering fees and surveying costs.
Southern Response argued that because the land was red-zoned and the Avonside Dr landowners were building elsewhere, the costs were hypothetical.
However, Justice Denis Clifford ruled that a reasonable estimate for fees, on the basis the property was being rebuilt on the site, should be included.
The Supreme Court has upheld that decision.
In a judgement released today the judges said: "We accept Avonside's submission that the fact that this is a notional, rather than actual, rebuild does not affect the inclusion of an allowance for risks generally encountered.
"Such risks are relevant to estimating the cost of an actual rebuild and, as noted above, it is the actual cost of rebuilding that must be estimated. The Court of Appeal was thus correct to accept the inclusion of an allowance for contingencies."
The ruling could pay the way for millions of dollars in extra payments from Southern Response policy holders who are yet to settle.
The Supreme Court ordered Southern Response to pay costs of $15,000 to the Avonside Dr property owner.
