Boarding houses are residential buildings and should be covered by the state-owned Earthquake Commission (EQC), New Zealand’s High Court has ruled.

Two Christchurch boarding house owners took the EQC to court seeking a declaration that their six properties were covered, and Justice John Priestley says another 30 owners are awaiting the decision.

Under the EQC Act, policyholders are covered for the first $NZ100,000 ($82,000) of building damage and $NZ20,000 ($16,400) of contents, after which they deal with their private insurer.

The two owners’ insurers are Southern Response – the Government-owned entity which took on the quake claims of AMI Insurance when it was acquired by IAG – and Vero-owned AA Insurance. The insurers had passed to the EQC a natural disaster premium from the property owners’ policies.

The six properties were substantially damaged in the quakes, with four of them now demolished.

The EQC argued boarding houses are not residential properties under the Act because they do not comprise one dwelling, tenants’ rooms are not self-contained and tenants are not living together as a household.

But Justice Priestley says citizens are displaced when such homes are destroyed and replacement structures must be built. “I see this as being core to the purpose and policy of the Act.”

He says the six boarding houses were self-contained and the residents, many of them foreign language students, each had their own room.

“The stark reality is that the Christchurch earthquakes resulted in the destruction or severe damage of all six boarding houses, thus depriving their occupants, at the time of the natural disaster, of their homes,” the judge said.

He says occupants regarded the boarding houses as home and some had been residents for a considerable period.