Meth – Is Your Insurance Going To Cover It?

13th March 2017 | By: Dave Smyth

meth rental insuranceI was asked recently by one of our members how to do a credit check. I was thinking about this request when an important email came in from IAG about Meth contamination. IAG is the market leader in New Zealand with a number of insurance brands under their wing. This document details very clearly their stance on Meth, and what landlords need to do.

There’s no cover for contamination that involves you or any member of your family. It’s important that you communicate this to your family in case they inadvertently (for example, through organising a party at home) allow meth contamination to occur.

Landlord obligations under your policy must be fully met for a claim to be accepted. Meeting these obligations and managing a rental property well are the best way to protect yourself from contamination risk.

Holiday rentals and short period tenancies (less than 90 days) are not covered for meth contamination resulting from meth use. This includes homes that are available on property sharing websites.

Contamination from manufacturing, storage and distribution is covered for these short-term rental properties.

Home cover only applies where you have been continuously insured with IAG and contamination first occurred during this time. If contamination existed prior to insuring with IAG, no contamination cover is provided.

Your home policy cover pays to decontaminate to below the currently recognised standard. That means that some level of contamination may remain, but at a level that is deemed safe.

Your contents policy does not provide any cover for meth contamination. This is because it is not possible to identify where, when or how contamination is likely to have occurred.

Where landlord’s contents are covered by the home policy, landlord’s contents will also be covered for meth contamination. Landlord’s home policies that do not extend cover to landlord’s contents will not cover meth contamination of those contents.

This is what you the landlord must do.

You, or the person who manages the tenancy on your behalf, must:

(a) exercise reasonable care in the selection of tenant(s) by at least obtaining satisfactory identification and written or verbal references for each adult tenant and when a reasonable landlord would consider it appropriate, also check their credit and Tenancy Tribunal history, and

(b) keep written records of the pre-tenancy checks conducted for each adult tenant, and provide to us a copy of these if we request it, and

(c) collect a total of three weeks’ rent in any combination of rent in advance and bond that will be registered with Tenancy Services, and

(d) complete an internal and external inspection of the home at a minimum of three monthly intervals and the relevant residential dwelling upon every change of tenant(s), and
(e) keep photographs and a written record of the outcome of each inspection, and provide to us a copy of these if we request it, and

(f) monitor rent on a weekly basis with written notification being sent to the tenant(s) whenever rent is 14 days in arrears, together with a personal visit to determine if the tenant(s) remain in residence, and

(g) make an application to the Tenancy Tribunal for vacant possession in accordance with the provisions of the Residential Tenancies Act 1986 if the rent is 21 days in arrears, or ii. you become aware of any illegal activity by the occupant(s) at the home, or iii. intentional damage to the home is caused by one of its occupant(s). Renewed policies will include the updated landlord obligations, meaning you’ll need to meet inspection and monitoring requirements from when the renewal takes effect. The updated tenant-vetting requirements will only apply to new tenancies after the renewal, not to your existing tenants.

In talking to property managers who have recently had Meth claims I can assure you that the above is rigorously followed. The insurance companies are asking detailed questions about tenant selection.

What I consider are vague statements around how to do those checks are made like contacting tenancy services. What does doing a credit check mean and how does one do it.

The Government has put some restrictions on what landlords can check. They have stopped us doing motor vehicle checks that I used to find very useful.

There are a few options to do checks. I have found the most economic and easiest credit agency to use for most landlords is TINZ. ( I have their web site permanently up on my browser desk top. You need to open an account with them before you “need” to do a check. Payment for each check is made via your credit card after each check. Financial members of Nelson PIA should supply your membership number to them. The membership number is on your membership card. Lost your card? Then down load the NZPIF App onto your phone and click membership card. It will ask you for your email and “bing” there is the card!

Next do your credit check. The TINZ site will give you details of tribunal cases as well. But that is not enough. You need to call the previous landlord of your applicant for a reference. When gathering up the previous landlord name and phone number from the applicant you need to find out if that landlord was the owner, relative, or property manager.

This is where things get tricky. You are required by the insurance company to confirm the true identity of the referee. For owners check the ownership of the previous rental via Terranet, LINZ, QV, Property Guru, etc. For property managers look at the company web site to make sure the mobile phone number given matches the number on the company web site.

The insurance companies are demanding to see a written record of the conversation held with the previous landlord.

When talking to a referee you need to ask a good range of questions to make sure firstly that you have the correct person (and not a relative / friend).

Critical details are things like how long was the tenancy and when did the tenant leave the rental. Who lived with them and other details about the tenancy?

Glenn Morris is the current secretary of the Nelson Property Investors Association. He was active in the review of the RTA and is a well-known figure in the property investment community. He has a reputation for effectively managing difficult tenancie

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