Updated:Heritage New Zealand have issued a Media Release in response to The Press article and it can be found at the following link-

“Heritage New Zealand responds to Timeball Station insurance article” HNZ Media Release

The Press Reported:

"... In 2010, the HeritageNZ board reduced insurance cover on its properties to a maximum of two-thirds, (HNZ national business manager Julie) Rowan said. Later that year, the earthquakes began. ...
"The board considered that any loss greater than two-thirds would reduce the likelihood of a rebuild," she said.
"Where we are able to reduce the premiums we pay, cost savings can be used for areas such as pre-emptive strengthening and maintenance of the buildings we care for," Rowan said. "

"Lyttelton's heritage Timeball Station was under-insured by $3.6m"  The Press
http://www.stuff.co.nz/the-press/business/the-rebuild/74610183/lytteltons-heritage-timeball-station-was-underinsured-by-36m