What Is Landlord Insurance?
There are a multitude of rental house insurance policies available on
the NZ market, with many insurers
having multiple variations of cover they
provide, the following can only
provide a “helicopter view” of the
general categories of cover and concepts.
Traditional cover (or
standard cover) with tenancy occupation extension
This is the most common cover in
NZ, it is based on the
standard owner occupier house policy, with much of the
standard cover deleted eg Gradual damage, Accidental damage & Temporary
In some cases the
policy wording includes these covers,
but then states that
they do not apply if the
property is tenanted, leaving some landlords thinking
they have more cover than they
Quite often they are “sum
insured” policies rather than “size
based” policies, meaning that you may not get enough to rebuild.
The actual cover provided is usually little more than Fire, flood, storm
damage, earthquake and car or plane crashing into the
house & loss of rents (but only in the
event of a fire).
Top up cover
This is a policy that sits on top of your standard (base) house policy and
provides additional cover, such as malicious tenant damage and rent loss due to
tenant default. The House Insurer still needs to know & agree that
the property is tenanted, otherwise
they may decline your claim, even if the claim is not related to the tenants!
Cover is usually limited to a maximum of $20-$30,000.
Among the issues we have come
The policy limit
may not be enough to cover the
have taken this policy thinking it was all they
needed, meaning that they are not
covered, if for example the
tenant accidently burnt the
house down.(some top up policies can decline any claim if you do not have a base
the basic house policy and the top up policy, say the
tenant maliciously sets fire to the
house, the house policy does not pay,
although it covers fire it excludes malicious acts by
the tenant. & the top up policy does not pay, although it
covers malicious acts (up to $20-30,000) because it excludes fire damage. So
landlord maybe left without a house or any claim payment.
These are modern policies that provide both the
standard & top up cover.
The house is usually covered for its size (for non tenant damage) meaning
you should not be underinsured and you will get a similar sized replacement
The malicious damage cover provided by different policies ranges from
$3,000 to the full replacement value
of the house.
They may provide additional cover like gradual damage, however saying that,
the quality of
the gradual damage cover varies widely between policies. Some
only cover leaks from internal (inside the
wall) water supply pipes others cover
leaks from water supply & waste water pipes and damages caused by over flowing
As with all insurance it’s vital to read & understand
the policy wording, especially the “exclusions & warranties”.
Good cover may not cost more & even if it does – remember why you have
insurance - getting it wrong could ruin you.
Finding the right insurance
solution is not for the
fainthearted, it should be done
preferably with a broker who can consider your l circumstances and recommend
the best insurance solution!
Good cover doesn’t cost it pays!