The court dismissed the appeal, from Ruiren Xu and Diamantina Trust Ltd, against last year's High Court decision that insurers IAG need only pay them the indemnity value of their house in Wainoni, Christchurch.

The Appeal Court decision could be further appealed through the Supreme Court.

Xu and Diamantina had the original owner's insurance claim on the house reassigned to them when they bought it in 2014.

Their case differs from buyers left with no cover after repairs done for previous owners by EQC were botched, sending the re-repair bill over-cap.

The purchase of the Wainoni house was arranged by Bryan Staples, then owner of insurance advocacy firm Earthquake Services, and both Xu and Diamantina have been shareholders in Staples' companies.

The Appeal Court ruling agreed with the High Court that based on a 30-year-old precedent, the owners could not claim the cost of full reinstatement if the previous owner, as policyholder, had not intended to restore the house. 

Insurance companies usually only pay out full replacement cost if the insured party intends to rebuild or repair. It usually pays indemnity if the insured has other plans, such as selling the property in a damaged condition. Insurers consider an original owner not to have suffered a loss, against which they are insured, if they sell a property for its repaired value and reassign the claim to the buyers. 

Xu and Diamantina Trust Ltd had sought $163,000 from the Earthquake Commission (EQC) and $353,888 from IAG.

 - Stuff