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Property Management

Insurance Excessess

 

Recent changes to legislation regarding tenant liability under insurance claims, mean that if tenants or their guests carelessly damage a rental property, they are liable for the cost of the damage up to four weeks' rent or the landlord's insurance excess (if applicable), whichever is lower. This means that a landlord must disclose any insurance excesses on a tenancy agreement and provide a statement that a copy of the policy wording is available on request by the tenant.

 

Diane Nelson from Real Landlord Insurance says they have been fielding calls from throughout New Zealand from Landlords wanting to increase their insurance excesses (this bringing their premiums down).

 

However, they are concerned that many landlords won't of thought through the ramification of doing this,

 

Most claims against building (house) insurance policies are for events (eg; fire, flood, water damage) that are not the result of tenant damage and therefore the landlord may find themselves in a poor position with having to pay the higher excesses they have nominated. This should be thought through very carefully before changing excesses and the landlord’s financial ability to be able to cover the excess payable.

 


 

Important update for Landlords - Unlawful residential premises

 

Prior to 27 August 2019, tenants living in unlawful premises such as sleep-outs or garages were not always protected by the Residential Tenancies Act. Under the new Act, the definition of ‘residential premises’ has been revised. Now, regardless of whether the premises can be legally resided in, they will be under the jurisdiction of the RTA, giving the Tenancy Tribunal full jurisdiction over cases concerning unlawful premises.

It is important to note that under the RTA, landlords must comply with all legal requirements that relate to buildings and health and safety before the start of a tenancy.

 

At Harcourts, we do not manage properties that do not meet the relevant laws and bylaws, however, if landlords are in doubt about any obligations under an Act, or as to whether a property is lawful, they should take immediate action to investigate and remedy any breach.

 


 

Important Update around Insurance on rented property

 

New tenancy legislation was passed on 30 July 2019 which will affect landlords and tenants. These changes take effect on 27 August 2019. The bill amends the Residential Tenancies Act 1986 (RTA) and addresses tenant liability for damage, unlawful residential premises and contamination of rental properties.

 

Tenant liability for damage (and insurance)


There has been confusion in the property management industry since 2016 when a Tenancy Tribunal decision found that a tenant who damaged a rental property ‘carelessly’ could not be expected to pay the cost to repair. Prior to this, the expectation was that if a tenant caused the damage, they paid for the repair.

This amendment addresses a tenant’s liability for a careless act that causes the destruction of, or damage to, a property but limits their liability to a maximum of four weeks rent or the landlord’s insurance excess, whichever is lower.

 

Tenants get the benefit of a landlord’s insurance claim if they carelessly damage a property.

 

From 27 August 2019, a landlord must include information about the insurance for the premises in every new Tenancy Agreement. If they do not, this is deemed to be an unlawful act and they can face a penalty of up to $500.

The information must stipulate whether or not the property is insured and if so, what the excess amount is. This statement must also advise a tenant that a copy of the insurance policy is available for them to review upon request.

For existing tenancies, insurance information and/or a policy document must be provided within a reasonable time frame if requested.