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 â€œhelicopter viewâ€ 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 e.g gradual damage, accidental damage & temporary accommodation. 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 actually have.
Among the issues we have come across are:
The policy limit may not be enough to cover the damage done.
Some landlords have taken this policy thinking it was all they needed, meaning that they are not covered, if for example the tenant accidentally burnt the house down. Some top up policies can decline any claim if you do not have a base policy.
Conflicts between 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 and the top up policy does not pay. Although it covers malicious acts (up to $20-30,000) because it excludes fire damage, the landlord may be 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 replacement value (for non tenant damage) meaning you should not be under insured and you will get a similar replacement house. 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, 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 baths etc. As with all insurances it is 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 individual circumstances and recommend the best insurance solution!
Good cover does not cost – it pays!