Landlord Insurance – What’s That About?

Like all insurances, you don’t like paying the premium, until something goes wrong.  All banks in New Zealand require insurance over a property when providing a mortgage to the property owner. Your insurer will need to know that the property is going to be lived in by a Tenant, as that will affect the policy they provide you and the insurance excess.    

Landlords need insurance to cover damage to their property. A New Zealand Residential Tenancy Agreement needs to include an insurance statement that states the details of the property owners insurance excess. Tenants in some instances are liable for damage to a property up to the maximum of 4 weeks rent, or the Insurance excess of the Landlord’s insurance policy. Whichever is the lowest.

Talk to your Insurance company to get the right policy for your property.  Certain insurance policies can also cover vacancy during a tenancy where a tenant has been evicted or abandoned the property. As Property Managers we see multiple different types of claims in Wellington, from flood & storm damage to leaking hot water tanks. 

What’s Covered, And What’s Not?

Insurance is there to help when big problems occur.  It won’t help when you see that the carpet has worn, or when curtains have become sun-damaged. That is wear and tear. If a tenant does damage your property, for example, carpet staining, each stain could be from one event, or multiple events.  An insurance company could assign an insurance excess for each stain!  Making a claim, in come cases may not make financial sense, Whereas if all the carpet was destroyed at one event, then there is only one excess to pay. 

Deliberate Damage vs Accidental Damage?

Generally, insurance policies are designed to pay out to cover accidental damage. When a rental property has been deliberately damaged, a Landlord may find that their Insurance Company may not be claimable. So it’s important to check that your insurer does provide a landlord extension on their policy to cover damage.  We have good relationships with insurance brokers around the region. Ask us for a name in your area.  Reach out, say hello, and let us look after your tenants and your investment property for you. Contact us, Switch to us, or call us today on 0800 567 563.