Hi all
I thought I might bring something to investors’ attention. I’d be curious to see if others have had a similar experience.
Over the past year, I have been battling with my insurance company (State) regarding the contents policies I have on two 5 bedroom townhouse units that are rented out on a room-by-room basis.
The policies have been in place for a number of years. This year, though, State refused to renew the policies as they were insured under a "personal" policy. I was being forced to change to a commercial policy.
The initial reason given was that State believed my units were boarding houses. This sparked a protracted debate with them over definitions contained in the Residential Tenancies Act. During this time State also involved EQC, as their interpretation of both the RTA and Unit Titles Act was seen as pivotal to State's position.
What emerged from this was interesting, and something that none of us, including State, really expected.
It transpires that:
..." in order for contents to be covered by the Earthquake Commission, they must be kept in a dwelling as defined in the Earthquake Commission Act 1993. The EQC has advised us that in order for a building to be covered, it must be fully self-contained and the whole of the dwelling is made available for the use of the occupants. EQC will not consider a building rented out on a room by room basis to be a “dwelling” for EQCover purposes, even where the building itself is fully self-contained, if the entire building is not available for use by all of its occupants. This is because each part of the building rented to each tenants is not fully self-contained in its own right. Where the building is not considered a “dwelling” in accordance with the Act, then the contents will not be covered either".
So, my townhouse units are not a dwelling in their eyes, nor for that matter is any other property that is rented out room-by-room – regardless of the number of bedrooms. If it is not defined as a dwelling, then it won’t be covered by EQC. If not covered by EQC, then commercial policies at commercial rates must be applied.
State informed me that, had I claimed under the policy I had, any claim would more than likely have been declined. Likewise, any claim a tenant had made under their own personal policy.
In terms of what it means to me financially, premiums went up 135% for the same level of cover.
So, anyone with a property that is rented room-by-room should check their policies and make sure it is appropriate and that they are covered. I’m not sure what it means for building insurance, and whether a separate policy might be needed, as our building insurance is covered by body corp fees.
I’d be curious to know if anyone else has encountered this in what seems to be a rapidly changing insurance/EQC policy environment!
Cheers
I thought I might bring something to investors’ attention. I’d be curious to see if others have had a similar experience.
Over the past year, I have been battling with my insurance company (State) regarding the contents policies I have on two 5 bedroom townhouse units that are rented out on a room-by-room basis.
The policies have been in place for a number of years. This year, though, State refused to renew the policies as they were insured under a "personal" policy. I was being forced to change to a commercial policy.
The initial reason given was that State believed my units were boarding houses. This sparked a protracted debate with them over definitions contained in the Residential Tenancies Act. During this time State also involved EQC, as their interpretation of both the RTA and Unit Titles Act was seen as pivotal to State's position.
What emerged from this was interesting, and something that none of us, including State, really expected.
It transpires that:
..." in order for contents to be covered by the Earthquake Commission, they must be kept in a dwelling as defined in the Earthquake Commission Act 1993. The EQC has advised us that in order for a building to be covered, it must be fully self-contained and the whole of the dwelling is made available for the use of the occupants. EQC will not consider a building rented out on a room by room basis to be a “dwelling” for EQCover purposes, even where the building itself is fully self-contained, if the entire building is not available for use by all of its occupants. This is because each part of the building rented to each tenants is not fully self-contained in its own right. Where the building is not considered a “dwelling” in accordance with the Act, then the contents will not be covered either".
So, my townhouse units are not a dwelling in their eyes, nor for that matter is any other property that is rented out room-by-room – regardless of the number of bedrooms. If it is not defined as a dwelling, then it won’t be covered by EQC. If not covered by EQC, then commercial policies at commercial rates must be applied.
State informed me that, had I claimed under the policy I had, any claim would more than likely have been declined. Likewise, any claim a tenant had made under their own personal policy.
In terms of what it means to me financially, premiums went up 135% for the same level of cover.
So, anyone with a property that is rented room-by-room should check their policies and make sure it is appropriate and that they are covered. I’m not sure what it means for building insurance, and whether a separate policy might be needed, as our building insurance is covered by body corp fees.
I’d be curious to know if anyone else has encountered this in what seems to be a rapidly changing insurance/EQC policy environment!
Cheers
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