Property partially habitable after flooding & landlord insurance

[GML]

The lower level of the property was damaged by flooding in the January cyclone (garages, rumpus, entry). The insurance company has been super slow in fully assessing the damage (the surveyor only visited in November) and as yet we are still unable to proceed with repairs. It's now coming up to a year. My landlord insurance doesn't cover the loss of rent (in this case a rent reduction) as the house is still partially habitable and the tenants didn't have to move out. Does anyone else know of an insurance company that does cover for this, any other advice, or am I just here to vent??!!

[Sanya]

Who is your current insurer?

Most landlord policies have loss of rent cover as standard or an option to add it.

Initio insurance offers loss of rent cover with a max payout to the cover limit you choose, or 12 months of rent.

NZPIF members get a discount on premiums which is extremely welcome in this age of soaring insurance costs.

[GML]

My insurance is with MAS. They state: Loss of Rent
We'll automatically provide up to $15,000 loss of rent cover where damage is as a consequence of sudden accidental loss to the property and makes the house uninhabitable.

So unless there is a loss of services, such as cooking, heating or bathroom facilities, the house is not considered to be uninhabitable.

This clause for Initio is similar and states the house must be "unliveable".

My issue is the property doesn't meet these criteria, but approx 30% floor area can't be used as expected by the tenants. And it's been nearly a year that the claim has dragged on for.

[hawkeye]

Hi, unfortunately after the earthquakes in Christchurch this was very common. Rent insurance only lasts a short time then there is no compensation, and they won’t refund interest on mortgages that must be paid even if the rental can’t be occupied. We felt it was all designed to run people out of money and to force people to accept low ball offers on repairs. I don’t think you will have much luck pursuing compensation as many in Christchurch attempted this and failed.

Some christchurch claimants waited 5 years or more for settlements even so insurers know how to drag it out.
their strategy and timeline they work to:
deny claim
deny extent of damage/ say it’s pre existing/ refuse cover under policy loophole
deny extent of repair strategy
deny cost of agreed repair strategy and quality of fittings and fixtures

each step has months of time in between waiting for them to get around to it. Each time you call you have to reexplain yourself as there is a new person on your case.

when they finally decide you aren’t going to give up they give you a new person who says “I don’t know why this wasn’t sorted years ago. It’s pretty straightforward”.

[donna]

Madness. LLs must declare they have insurance and how much the property is insured for - yet why? It's not like LLs can force their insurer to pay out.

So unless there is a loss of services, such as cooking, heating or bathroom facilities, the house is not considered uninhabitable.

So the house could be minus its roof, maybe lost its cladding, and if it's an earthquake - access may be dangerous, but if the 'services' are still running - the house is habitable?

[Sanya]

My insurance is with MAS. They state: Loss of Rent
We'll automatically provide up to $15,000 loss of rent cover where damage is as a consequence of sudden accidental loss to the property and makes the house uninhabitable.

So unless there is a loss of services, such as cooking, heating or bathroom facilities, the house is not considered to be uninhabitable.

This clause for Initio is similar and states the house must be "unliveable".

My issue is the property doesn't meet these criteria, but approx 30% floor area can't be used as expected by the tenants. And it's been nearly a year that the claim has dragged on for.

Noted.

In any event $15k loss of rent cover is inadequate. That amounts to just $288 rent per week on a yearly basis. $40k loss of rent cover is more the norm.

Your point on whether or not a house is considered uninhabitable has prompted me to ask Initio how they define that and importantly who makes the judgement? Could it be determined by the Government, local authority or even a tenancy tribunal which might take a more liberal stance on the definition?

[Sanya]

Noted.

In any event $15k loss of rent cover is inadequate. That amounts to just $288 rent per week on a yearly basis. $40k loss of rent cover is more the norm.

Your point on whether or not a house is considered uninhabitable has prompted me to ask Initio how they define that and importantly who makes the judgement? Could it be determined by the Government, local authority or even a tenancy tribunal which might take a more liberal stance on the definition?

Following on from the above here is the reply from Initio regarding 3 questions I asked about loss of rent cover. Their reply looks reasonable to me.




1. Can you please provide a definition of what a “home that cannot be lived in” means?

A home that “cannot be lived in” is not specifically prescribed in the policy wording, which is intentional and reflective of the fact that we would like to be able to consider the claims on their own merits – the circumstances of each claim, property and occupants are each unique so having blanket rules might not be well suited to all situations. Things that we would be considering when making a decision about whether a property is unable to be lived it would include:

a. Health and safety issues caused by the damage or the repairs, and which areas of the property these affect (If the repairs are in the hallway and are unsafe to be around, then the property might be unable to be lived in, but if they are in an unused guest bedroom, then we would likely consider the property is able to be lived in as normal.)

b. Availability of services – does the property still retain normal ablutions required for daily living? I.e cooking, cleaning, sleeping.

c. Do considerations need to be made due to tenant’s personal circumstances? Tenants who are elderly or may have complex medical issues may be less able to cope with a property which has been affected by an event. These factors would also be considered when deciding if a reasonable person would anticipate whether the occupants could continue to occupy the property. If repairs can be done while the tenant is at work during the day and can comfortably and practically be used at night, then we would likely not accept that the home could not be lived it, however if a parent was home during the day with young children, then we would be more likely to determine that it would not be reasonable for them to stay.



2. Further to 1.) above would a loss of key service such as loss of cooking or bathroom facilities (for examples) mean a rental property is not considered habitable?

Correct – loss of key services to the home (kitchen, bathroom, water, sewerage) would generally affirm a decision that the property would be considered unable to be lived in.



3. Who makes the determination on whether a home can be lived in? Is it Initio alone or can Government, local authority, or a court such as a tenancy tribunal make the determination?

Initio and our underwriters would determine whether costs relating to LOR/loss of rent (due to a property being uninhabitable) would be accepted as part of a claim, with the underwriter IAG New Zealand Ltd having the final say. That decision would be informed by the information available at the time, including if there was any directive from the (central or local) Government or Tenancy Tribunal. It is unlikely that the underwriter would be able to support a decision contrary to either of these jurisdictions, however it is possible that a property is made uninhabitable for reasons which the policy does not cover. The decision of whether the loss is covered by the policy would rest with the underwriter.