IAG, one of New Zealand’s leading insurance providers has drawn a line in the sand with regards to claims around Meth-contaminated properties. In our opinion, their stance leads us a step closer to compulsory Meth Testing for all residential rental properties in New Zealand.
The stance IAG has taken is understandable considering a number of claims it is having to deal with. In 2016, IAG dealt with over 60 claims a month, that’s well over 700 claims in 2016. The total amount of claims that IAG has had around Meth-contaminated properties in the last 12 months is around $14 million.
Do the basic maths and this equates to approximately $20,000 a claim. With numbers like this, it was only a matter of time before one of the major insurance players took a stance and other will probably follow suit.
IAG make their position perfectly clear.
- The maximum claimable amount has increased from $25,000 to $30,000
- Premiums on rental properties will increase by a range of around $40 to $130 per annum
- Standard excess will increase from $400 to $2,500
- Probably most importantly, Claims will not be accepted for contamination to contents in homes, if it is too difficult to determine the timing and nature of any event causing contamination.
What this means is that it is highly unlikely that the likes of State, AMI, NZI and Lumley will pay out if a landlord cannot prove that the property was clean at the commencement of the tenancy. This stance means that Property Management companies have to recommend testing in between tenancies to landlords or else they may find themselves facing action against unsuspecting landlords.
The reality is that this drug is not going to go away anytime soon and with the increase in insurance plus the cost of testing between tenancies, the cost of being a landlord is likely to go up by an estimated annual amount of approximately $300.
Tenants will again face rent increases as landlords look to pass on the extra cost of around $5 to $10 a week. With some regions of New Zealand facing a critical shortage of rental stock, this will only squeeze an already tight rental sector even further.
IAG’s stance may also have major consequences around……….