A widowed mother of two described as "destitute" after her Sandymount home was damaged by escaped water has been offered some €800,000 towards repairs and her chosen alternative accommodation in an apartment in Dublin's five star Four Seasons Hotel.

Ann Marie Glennon Cully indicated today she is prepared to accept a €645,000 offer from AXA Insurance Ltd, following earlier payments totalling €159,000, in settlement of injunction proceedings in her action against the insurer.

She and her children Zane and Zara had sued AXA alleging unacceptable delays by it in having their home - Victoria House, St John's Road, Sandymount - reinstated so they could return to live in it.

Axa previously agreed to pay €514,000 for a first phase of repair works but disputed a claim for €256,000 for a second phase. While it paid €7,500 per month for the family's Four Seasons accommodation from October 2011, it argued against continuing to pay that amount after March 2012, instead offering €5,000 per month until repairs were complete.

The house was extensively damaged due to escaped water in late 2009 and, after further such damage in autumn 2011, the family claimed it was uninhabitable.

In October 2011, they moved into a one bedroom apartment, plus a standard double room, at the Four Seasons. Since December 2011, they have been living in the one bedroom apartment which her mother described as "cramped".

Ann Marie Glennon Cully said, while there were other houses similar to her home on Dublin's Ailesbury, Shrewsbury and Simmonscourt roads at rents between €7-10,000 monthly, they were not available. They moved into the Four Seasons because it was near their home and the only nearby hotel that would take the children's pets - four dogs and a parrot.

AXA argued she herself chose the "very expensive" Four Seasons and was intent on staying there "at all costs". It claimed she "set her face" against other substantial family residences and refused to even view a four bedroom house on St John's Road for rent at €1,900 monthly.

In the action, Ms Glennon Cully said she discovered significant flooding under the floorboards when the heating system's pipework was being replaced in October 2009. That flooding inflicted extensive damage and a claim was notified to Axa in January 2010.

Three years later, only emergency damage limitaiton work had been carried out and actual reinstatement works had not started, she alleged. She had builders who were ready to start last March but could not until AXA gave the go ahead, she claimed.

Among a series of claims, she alleged AXA tried to change the terms of her insurance policy.

AXA denied the claims, denied responsibility for the delays and argued it had tried to reach a fair and reasonable settlement. The matter was complicated because a "restoration" project was underway at Victoria House before the discovery of the escape of water and it had not obtained details of those works, it claimed.

The case was before Mr Justice Peter Kelly today via an application by the family for orders, pending a full hearing, requiring AXA pay them sums of €75,000, plus €9,000 due to the Four Seasons and €7,500 per month for their accommodation for the next six months. They also sought orders requiring AXA engage in "bona fide" talks with them to ensure their home be speedily repaired.

Dr Forde said the matter was urgent for reasons including Victoria House was now uninsured.

In an affidavit, Ms Glennon Cully said she feared they may be required leave their accommodation because they could no longer pay the rent. She had no savings.

Paul Fogarty, for AXA, said it was prepared to pay €645,000 for the works to the house - as previously offered - and was not raising arbitration issues. After consulting with Ms Glennon Cully and her daughter, Dr Forde indicated his clients were likely to accept that offer.

The judge, who said AXA appeared to have behaved "reasonably", adjourned the matter for mention tomorrow to allow consultation with Zane on the offer.