The New Zealand Government will pay about $NZ12 million ($10.93 million) to uninsured former Christchurch “red-zone” residents.

After the 2010/11 Canterbury earthquakes, the worst-affected areas were designated residential red zones and a previous government made voluntary offers to buy properties.

Insured property owners were offered 100% of the 2007/08 rateable value, but uninsured people were offered only 50%.

A group calling themselves the “quake outcasts” challenged this, with the Court of Appeal declaring the Government’s treatment of uninsured residents unlawful.

Greater Christchurch Regeneration Minister Megan Woods last week confirmed the Government will pay more than 100 uninsured former red-zone owners 100% of the 2007/08 rateable value.

“The plight of people who were uninsured at the time of the quakes has been one of the difficult legacies of the earthquakes,” she said. “The previous government’s offer of nothing for uninsured homes left many people significantly out of pocket.

“As many of the people involved have tested their claims in court, we’ve been given clear rulings that an area-wide approach to red-zoning suggested an area-wide response was required to support recovery – one that did not differentiate on the basis of insurance status.”  

Ms Woods says the Government is also willing to purchase remaining privately owned red-zone properties, on the basis of 100% of the 2007/08 rateable value for land and improvements, regardless of insurance status.

“We need to stress this offer is voluntary. It is not a blanket or compulsory offer.”

Insurance Council of New Zealand CEO Tim Grafton says it is “vital” the decision does not set a precedent for future governments to compensate those without insurance.

“That would be not only unfair on the insured, but would incentivise dependence on the Government and create a major moral hazard for all taxpayers,” he told insuranceNEWS.com.au.