The Residential Tenancies Amendment Bill (No 2) has just passed the Select Committee stage of the New Zealand legislative process. The Bill will change the Residential Tenancies Act (1986) in ways that will affect general insurers in the following areas:
- clarifying the state of the law regarding tenants’ responsibility for careless damage to property, including insurers’ rights of recovery;
- requiring landlords to disclose information about their insurance arrangements to tenants; and
- setting rules for testing properties for contaminants, including methamphetamine.
I will be watching carefully the final outcome of the process as I see rules for testing properties for methamphetamine being mandatory here. This as I have reported on a few times is becoming a big issue in Australia.
Following my last post, my colleagues at LMI PolicyComparison.com conducted a review of our existing Landlords comparisons to see whether any addressed this. She found that currently only 2 policies provide cover for Chemical Contamination. One had a sub-limit of $20,000 and the other $10,000.
Currently this is being shown under the “Additional Information” section of our comparison.
They then carried out a full review of all the Landlords wordings to see whether any one else offered similar cover and found that they don’t and none of them had specific exclusions relating to it.
As a result to assist users of our comparison service the team have added a new cell into our existing comparison template so that we can show the cover offered. The cell is to be called “Chemical Contamination – Manufacturing Storage or Distribution of Any Controlled Drug” as the cover does not specifically mention methamphetamine’s but rather any controlled drug. Most Landlords wordings have a broader exclusion for pollutants which can include chemicals and we currently have an Exclusion cell for “Pollution other than Involving Animals, Terrorism or War and Nuclear Activities” in which we detail these exclusions.
The team did not stop there and checked the Home and Contents comparisons and wordings to see whether this is addressed anywhere in them and found that none of them have provided cover for chemical contamination. This did not surprise me as an occupier should know what is coming into their house and if they allow such substances, it would be unfair to have the insurer pay for the clean up.
Regarding chemicals, the review showed that there is usually an exclusion for pollutants, which can include chemicals, and we put this in the existing exclusion cell – “Pollution other than Involving Animals, Terrorism or War and Nuclear Activities”. Chemicals are also commonly excluded when it comes to (a) Any process of cleaning involving the use of chemicals other than domestic household chemicals and/or (b) Contamination by chemical and/or biological agents, which results from an act of terrorism. Neither of these relate to the cover we are talking about.
The most common exclusions relating to drugs are:
- Any property illegally in Insured’s possession stored in a dangerous and illegal way or any equipment connected with growing or creating any illegal substance
- Liability arising from or in connection with or involving committing or attempting to commit a criminal offence including the manufacture distribution and/or supply of illegal substances or drugs
- Liability and loss or damage when Insured is under the influence of an illegal substance or drug or loss or damage was caused or contributed to because Insured possessed supplied or consumed illegal substances or illegal drugs
- Insured’s possession supply manufacture or consumption of any illegal substances or illegal drugs
We currently have an exclusion cell for “Use of Alcohol or Drugs” in which we place all the above mentioned exclusions.
I may offer more comment when the New Zealand Legislation goes through and or after we have completed a similar review on LMI PolicyComparison.co.nz comparisons.