Have an interesting conundrum which I thought I'd post here to see what people think, which relates to home insurance.
My partner and I purchased a townhouse mid last year, which is attached to another townhouse, where both properties share a retaining wall. As a result, both properties are on a cross lease and for insurance purposes, are insured together under one policy.
When we purchased the property, we took over from the previous owners and their contributions to the insurance, which is split according to the LINZ report, as the other townhouse is bigger.
The previous owners of our property was renting it out, so shortly after we changed/added our details onto the insurance policy, we advised the insurance provider of the fact that we were owner occupiers - This resulted in a discount on the premium which we agreed with the other owner should be applied to our premium contributions - There was no change to their premiums and what they paid.
Now, this year the policy is up for renewal, and we went about obtaining the new pricing for the following 12 months. As my partner and I have been toying with the idea of living overseas at some point, we decided to get some pricing options if we decided to rent the property out.
So we requested 3 pricing options:
- If both properties were rented
- If one (our property) is owner occupied, and the other property is rented
- If both properties are owner occupied.
What we discovered is that if both properties are rented, our premium increases from it's current amount to about $400 extra. If one (our property) is owner occupied, then the pricing is similar to what it is now, and if both properties are owner occupied then there is no further discount - The premium would still be approx $400 less than if both properties were rented.
So here lies the issue: The other owner is saying that as the premium is the same price as if 2 units were occupied, my partner and I have had a 'good deal' as last year only our premium has been allocated at a discount.
In other words, he believes that the premium (and $400 discount) should be split for the next 12 months as per the LINZ report allocations.
My thoughts are that as we are the ones in effect 'creating' the discount due to being owner occupiers in our property, that the premium discount should be applied to our proportion of the premium. Subsequently, if we decided to rent our property out, then we should have to pay all the extra premium that would be added to the policy.
I really think that this is quite a bizarre insurance policy, as I expected there to be some degree of discount for one of the houses being owner occupied, and a bigger discount if both were owner occupied. The thought being, is that owners living within a property are generally more likely to look after it than a renter would, and it makes no sense for a full 'owner occupier' discount to be added to both properties if one is still rented out as there is still a greater risk of loss/harm.
Anyhow, what are your guys thoughts on this? Appreciate any ideas on the matter.