Both landlords and tenants should understand the importance of insurance.
There is no legal obligation for New Zealand landlords to take out insurance. However, it is always important to take measures to protect your investment.
Your insurance coverage will differ based on your insurance provider and your personal policy. Your rental property must be insured under a rental policy rather than standard house insurance.
What does landlords’ insurance cover?
In some instances, your landlord insurance might cover periods where your property is vacant & your income is lost. Some insurance policies may also cover tenant damages or theft and cover your legal liability as a landlord. Landlords should check with their insurance provider to understand their specific insurance policy.
You may also choose to insure any furniture or other items included in the tenancy agreement. Your tenant’s insurance will not cover these items.
What are my insurance obligations as a landlord?
As a landlord, you must issue an insurance statement with any new tenancy agreements. This statement will acknowledge whether or not the property is insured, and inform the tenants of any information they need to know – including the excess of any relevant policies. It must be clear that the insurance policy is available for the tenants to view upon request.
If, at any time, the insurance information changes, the landlord is obligated to inform the tenants within a reasonable timeframe.
Insurance for Tenants
We recommend that tenants take out insurance. If your landlord has insurance, this will cover the home, but it does not protect your personal belongings.
A common misconception is that people believe their landlord’s insurance will cover their belongings (it doesn’t). It may be a shock for those moving out of home to realise that their parent’s insurance doesn’t cover their belongings anymore.
Even if you are not on the tenancy agreement, it is a good idea to consider getting;
- Contents insurance to cover your belongings
- Personal liability insurance to protect you in certain situations.
For more information about your insurance options, reach out to an insurance provider.
Liability for damage
New legislation took effect on the 27th of August 2019, which has affected tenants’ liability for damage in their rental property.
If the tenants, or their guests, cause careless damage to the property, they will now be liable for the cost of the damage up to four weeks’ rent or the landlord’s insurance excess, whichever is lower.
As a tenant, you may be liable if you or your guests cause any damages to the property. For example, if a hot pot is taken off the stove and placed on the bench, leaving a burn mark, this would be classified as careless damage and the tenant would be liable for the costs associated with remedying the damage. While the tenant did not intend to burn the bench, their actions have inflicted damage to the property. In this instance, the tenant’s insurance would cover the damages or, if they do not have insurance, they will need to pay out of pocket.
Read more: Residential Tenancies Amendment Act 2019
FAQ
Is Landlord insurance worth having?
While it’s up to the individual to decide if they wish to take out landlord insurance, it is always important to protect your investments. Just ensure that you know what your policy does and does not cover.
What kind of insurance is the landlord responsible for?
It’s a landlord’s responsibility to organise insurance for their rental property. However, there is no legal obligation for landlords to have an insurance policy.
Is my landlord responsible for insuring my belongings?
As a tenant, your belongings are your responsibility. If you wish to insure your personal belongings, you will need to take out contents insurance.
Do my tenants pay the insurance?
No, the landlord is responsible for paying the premiums, should they wish to take out insurance on their home.
Is landlord insurance tax deductible?
If you are not using your rental property privately, you can deduct expenses from the rental income you include in your tax return. These expenses include; the cost of insuring your rental property. More information on rental property expenses is available here.
