Landlord Insurance and Negligent Tenants...

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Wheelbarrow01

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#201356 15-Aug-2016 13:50

I am sure I saw a thread about this on GZ in the last couple of weeks, but darned if I can find it now.

Anyway, I am talking about the recent case where an appeal court judge rulled a tenant not financially liable for the cost of damage after leaving a pot of oil unattended on the stove.

This ridiculous outcome has already started to rear its ugly head. I was just talking to my work colleague who told me that last week her tenant accidentially drove their car too far into their garage and damaged the garage wall. The tenant immediately informed the landlord and said they would pay to get the damage fixed. In the end, they lodged a claim with their own vehicle insurer for damage to 3rd party property caused by their vehicle. So far so good.

The tenant's insurance company contacted the landlord, and said that a claim had been lodged and they were processing it.

Today the landlord received a letter from the tenant's insurer citing the outcome of the recent appeals court case and said that the insurer (and by extension the tenant) no longer accept any liability, and that the landlord should lodge a claim with their own insurer.

It's a very slippery slope, but I fear we are now along for the ride, and a flood of similar cases is going to come to the fore.

It's bad enough to have tenants that simply do not care, but to have tenants who made a bona fide promise to put it right, only to have their own insurance company overturn that, is truly ridiculous.

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#1611923 15-Aug-2016 13:56

Really does sound to be getting out of hand. Hopefully they have insurance too :/ then it is the insurance company's problem.

Wheelbarrow01

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#1611925 15-Aug-2016 14:04

ubergeeknz:

Really does sound to be getting out of hand. Hopefully they have insurance too :/ then it is the insurance company's problem.

Well in this case, with a $900 excess (which that same appeal court judge ruled is not recoverable from the tenant), it's definitely the landlord's problem.

linw

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#1611928 15-Aug-2016 14:11

Wow, it's totally unfair to move the excess to the landlord. Where the hell are we heading?

And wait for the squeals if rents have to go up to cover this.

networkn

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#1611932 15-Aug-2016 14:19

I am gobsmacked. What reasoning exists for making it the Landlords responsibility?

I am not sure, but if you provide enough notice, are you able to ask a tenant to leave for any reason?

Wheelbarrow01

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#1611933 15-Aug-2016 14:21

networkn:

I am gobsmacked. What reasoning exists for making it the Landlords responsibility?

I am not sure, but if you provide enough notice, are you able to ask a tenant to leave for any reason?

Who knows what their reasoning is, but it pushes the responsibility squarely onto the landlord, which is unfair in my opinion. So if a tenant has a massive party the day before they vacate the property and the house is trashed in the process, the tenant can just say "sorry, it was an accident" and the cost of repair is shifted to the landlord and/or their insurer. there is no onus on the tenant to make good.

You can ask them to leave for any reason with 90 days' notice, or 42 days if the landlord or their immediate family require the property for their own accommodation. If a fixed term tenancy exists then you can't do this at all though.

MikeAqua

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#1611967 15-Aug-2016 14:41

Personally I think you friend's-tenant's-insurer is trying it on.

The tenant was in control of the car, so the damage is hardly a 'peril' beyond the tenant's control.

I would take the insurer to small claims.

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Wheelbarrow01

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#1611989 15-Aug-2016 14:59

MikeAqua:

Personally I think you friend's-tenant's-insurer is trying it on.

The tenant was in control of the car, so the damage is hardly a 'peril' beyond the tenant's control.

I would take the insurer to small claims.

But that is the crux of the issue - although not the same scenario, the principle is the same as the case that went all the way to the Court of Appeal. That judge ruled that where a landlord has insurance that would otherwise cover the damage, the tenant cannot be found liable (unless the damage was intentional) and the landlord should be compelled to claim against their own insurance, and payment of the excess is just the cost of being in the business of renting properties.

I imagine the small claims court would refer to the appeals court precident and just throw the case out.

In this case, the letter the landlord received from the tenant's insurer denying the claim specifically cited the ruling of the appeal court judge as the reason for the denial.

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surfisup1000

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#1612018 15-Aug-2016 15:33

In my view a house should be covered just once.

The way it seems you people are arguing, if you have a rental with 3 tenants, then, the landlord, and each of the 3 tenants should purchase a policy to cover house damage.

The only one winning here are the insurance companies if you go that route.

In my view, the landlord should just have the one policy and the policy cost and excess of any claim should be payable by the tenants.

I'm not sure any of you know the exact law that applies. Maybe the law is a mess and needs clarification?

Brumfondl

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#1612024 15-Aug-2016 15:38

Pretty sure the problem is that there is no law that applies.

ubergeeknz

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#1612026 15-Aug-2016 15:42

surfisup1000:

The way it seems you people are arguing, if you have a rental with 3 tenants, then, the landlord, and each of the 3 tenants should purchase a policy to cover house damage.

IANAL, but that's how it has always worked.

eg. if you cause a car accident, and the other party is insured, they recover costs from their insurance company (in effect), and then their insurance company recovers the cost from your insurance company (if you have one), who might recover part of it (ie. the excess) from you - the accident is deemed "your fault" and therefore you are liable.

If you are a tenant, you would generally take liability insurance (often bundled with contents insurance), so that if you accidentally burn the house down you are renting, your insurance company covers that cost for you (insures you against liability).

But the judge in that case ruled that tenants are not liable for accidental damage to a property, if the landlord has insurance. That, to me, flies in the face of convential wisdom wrt. liability in the case of accidents.

Brumfondl

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#1612038 15-Aug-2016 16:01

ubergeeknz:

surfisup1000:

The way it seems you people are arguing, if you have a rental with 3 tenants, then, the landlord, and each of the 3 tenants should purchase a policy to cover house damage.

IANAL, but that's how it has always worked.

eg. if you cause a car accident, and the other party is insured, they recover costs from their insurance company (in effect), and then their insurance company recovers the cost from your insurance company (if you have one), who might recover part of it (ie. the excess) from you - the accident is deemed "your fault" and therefore you are liable.

If you are a tenant, you would generally take liability insurance (often bundled with contents insurance), so that if you accidentally burn the house down you are renting, your insurance company covers that cost for you (insures you against liability).

But the judge in that case ruled that tenants are not liable for accidental damage to a property, if the landlord has insurance. That, to me, flies in the face of convential wisdom wrt. liability in the case of accidents.

The problem is that the way it was is not how it is for commercial properties and the case was argued that both types should be treated the same. Legislation is required to clarify things IMHO.

BlueShift

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#1612046 15-Aug-2016 16:17

I wonder if could be written into the tenancy agreement that the tenant will pay the excess?

ubergeeknz

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#1612056 15-Aug-2016 16:37

BlueShift:

I wonder if could be written into the tenancy agreement that the tenant will pay the excess?

You cannot contract out of law AFAIK

dclegg

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#1612059 15-Aug-2016 16:42

Wheelbarrow01:

[But that is the crux of the issue - although not the same scenario, the principle is the same as the case that went all the way to the Court of Appeal. That judge ruled that where a landlord has insurance that would otherwise cover the damage, the tenant cannot be found liable (unless the damage was intentional) and the landlord should be compelled to claim against their own insurance, and payment of the excess is just the cost of being in the business of renting properties.

We had the reverse happen recently.

We were temporarily renting, from February to June this year. Within a week of being in the house, we mistakenly put tinfoil on the bottom of the oven. It's a thing we've always done with ovens, but didn't know it was a no-go with modern ones (the oven was approximately 6 months old). It baked onto the enamel, and couldn't be removed.

The oven could not be repaired (don't go there; seperate rant), so had to be replaced. Our landlord got in contact with her insurer (Youi) to claim, but they used numerous excuses to get out of paying.

First they claimed she hadn't informed them she was renting the property (she had). Then they tried to say it wasn't covered by her insurance because it was considered damage to contents (even though she had both house and contents insurance with them).

I can't recall the exact wording for their reason to finally refuse the claim, but I remember it was some nonsense about it being an oven, and the damage being caused by heat.

We got in touch with our insurer (AA Insurance), who paid the claim with no fuss.

KrazyKid

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#1612060 15-Aug-2016 16:43

This is a silly situation. It's going to push up rents.

Not sure what your friend can do - maybe argue that the court ruling does not apply because it covered a situation with a fire and not car crash.
The need to get there insurer on side so that their insurer fights the tenants insurer.

I'd be giving my MP grief as well.

The tenants insurer is trying it on to save $900.

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