What are my obligations under Landlord Insurance?

Landlord insurance helps you to protect your investment, but only if you are meeting your obligations. It can include cover for things like intentional and accidental damage, loss of rent, and meth contamination.

IAG’s policies covering methamphetamine and loss of rent are changing. This means that New Zealand landlords now need to be meeting new obligations. Some of these obligations include:

background and credit checking prospective tenants and keeping copies of the checks
conducting quarterly inspections
keeping photographs and written records of each inspection, and
monitoring rent on a weekly basis

Landlord Insurance for meth contamination

IAG says landlords who fail to comply with any of the obligations of landlord insurance or home and contents insurance will not have meth contamination claims approved.

Unfortunately, this will be expensive for landlords who have contamination as testing alone can cost up to 2,500 dollars.
The largest insurance provider for New Zealand, IAG says the changes come after noticeable increases in meth contamination claims.

“The use of meth and its manufacture is widespread, and a growing problem throughout New Zealand. At IAG we’re seeing an increasing number of meth contamination claims and escalating public awareness of the health issues surrounding meth,” the company states in a video explaining the changes.

Rental Inspections

Your obligations under landlord insurance can vary between providers. So, make sure you read carefully to understand what you need to do when inspecting your rental property.

Most insurance companies require inspections once every three months. To be compliant with insurance, these inspections must be well documented with dates, written notes and photographs. Legally, you can inspect your property once every 30 days. However, inspecting this often could not only be an unnecessary waste of time, it could upset your tenants.

Article: How often should I inspect my rental property?

Tracking rent payments

Rent arrears is one of the most common reasons that landlords and tenants come before the Tenancy Tribunal. Keeping track of rent payments is one way to get ahead of this before it becomes a problem.

While policies will differ between providers, what is very clear is that to be eligible for rent arrears cover you must actively monitor payments weekly.

AMI Insurance states that the landlord’s obligation below, including that the landlord must apply to the Tenancy Tribunal if rent is 21 days in arrears.

‘monitor rents on a weekly basis with written notification being sent to the tenant(s) whenever rent is 14 days in arrears’
AMI Insurance

‘You must monitor rent in arrears
You or the person who manages the tenancy on your
behalf must:
• notify the tenants in writing when the rent is 7 days
in arrears
• personally deliver a second letter to the tenants
when the rent is 14 days in arrears, and determine if
the tenants are still occupying the property
• apply to the Tenancy Tribunal for a termination
order when the rent is 21 days in arrears.’
AA Insurance

Background and reference checks

While inspections and rent monitoring can be seen as standard among most landlords, background and credit checks are not.

Over the last few years, tenant checking is becoming a necessary first step when renting out a property. Above all, it is giving landlords peace of mind that they can avoid future issues with tenants. In addition, with IAG’s new landlord insurance policies it is now something that every landlord is now considering.

If you’re still unsure where to go for a credit check, read our article below. Most importantly, make sure you read the full list of IAG’s obligations. You can access them through this document.

Article: Who offers the most comprehensive credit check in New Zealand?

To sum it up, the new obligations under landlord insurance are easy to meet if you follow the right process. Firstly, make sure you do thorough background checks before you onboard your tenants. Secondly, keep detailed written and photographic records of all inspections. In addition, monitor your rent and keep great financial records.