3 Steps to be happy with Rental Property Insurance

Even while living overseas.

Dear overseas landlord,

Do you want to make sure that the property you have in New Zealand has the most beneficial insurance policy?

Do you recognise the benefit of the insurance specialist who is looking after your interests in New Zealand, someone who has experience, knowledge and education?

Have you thought about that the bank which provides you with the mortgage is not the best place to keep your rental property insurance with?

If you answered yes then this is the proposition for you:

Step 1.

You compare the policy you currently have on your rental property in New Zealand with the one I recommend you to have.

Step 2.

You obtain current and recommended insurance value for your rental property in New Zealand. You can check this page which has a very helpful link – it is called “Cordell insurance property online calculator”.

Step 3.

You email to us the details of the property. The house size, Year it was built, the house address and occupation details (tenanted or family occupied).

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Are you looking for rental property insurance?

Unoccupied Home insurance New Zealand

Unoccupied Home New Zealand

In NZ all insurance companies require to be notified if the house (rental property) is going to be vacant for a while. Normally the clients email to me or the insurer, whatever is easier. Most of them prefer one point of contact.

There are a few options to make sure that a rental house is looked after even when vacant :

Instruct your property manager to inspect the house once or twice a week or even ask someone to spend a night in the house on a weekly basis.

This is what AMP policy states:

Unoccupied Home

This policy does not provide cover for any loss:

  • to the home if unoccupied (meaning no authorised person has slept there overnight within the last 60 days), unless we have been notified and have agreed in writing to maintain cover, and provided that:
    1. The home and its lawns and gardens are kept in a tidy condition; and
    2. All external doors and windows are kept locked; and
    3. All papers and mail are collected regularly; and
    4. The home is under regular supervision.
  • to the home while unattended, if normally used as a holiday-home or weekend home, unless requirements 1 to 4 above are complied with.

However, where you ordinarily occupy the home, but your travel or medical commitments mean that the home is unoccupied for a period exceeding 60 days, we agree to maintain cover under this policy for an additional period of 30 days, provided that the requirements in 1 to 4 above are met.

The above policy wording extract simply tells you the rules how you can make sure that the house you have is going to be insured even when untenanted.  I hope you would agree it makes it much simpler now. The landlord extension is a very good feature as the rental property insurance.

The second most important question majority of overseas property investors in New Zealand have is:

“How to be covered for the loss of rent if the house is burn down”?

This is what the policy states about loss of rent.

Landlord’s Extension

If you have paid an additional premium for this Additional Benefit and it is shown on the schedule as being included, we will provide benefits A and B for each self-contained dwelling unit that you have told us about, provided that each is occupied by a tenant, and is located at the situation address shown on the schedule:

A. Landlord’s Furnishings

If landlord’s furnishings suffer loss covered by this policy, we will pay the indemnity value of these items.

Landlord’s furnishings for the purpose of this Additional Benefit, means dishwashers, stoves, refrigerators, washing machines, dryers and built in microwaves, not permanently wired into the home.

Our liability for landlord’s furnishings is limited to $20,000 per dwelling unit or the amount shown on the schedule, whichever is higher, for any one event.

As you can see from the above extract by having the right insurance policy in place your house furnishings are covered for up to $20,000. Sure majority of Kiwi houses do not have as much but it is better to have higher amount just in case.

There is a small example, for better understanding how much the home insurance landlord’s extension would cost you. House details for this example are below:

  • House is located in Auckland, North Shore;
  • Sum insured is $2.5K/sqm;
  • Rental;
  • Built in 2005;
  • Mortgage with a bank;
  • $500 Excess.
Size Sum Insured Premium
House
Only
House with
Landlord
Extension
Extension
Only
100 sqm $250K $770.13 $812.30 $42.17
200 sqm $500K $1,126.97 $1,221.70 $94.73
300 sqm $750K $1,454.84 $1,595.13 $140.29
400 sqm $1MIL $1,712.58 $1,886.22 $173.64
500 sqm $1.25MIL $1,997.81 $2,212.53 $214.72

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Loss of rent – This makes this policy to stand out from the rest on the market.

B. Loss of Rent

If the home is uninhabitable because:

  1. of loss covered by this policy (or which would be covered but for the operation of the Earthquake Commission Act 1993); or
  2. a government or local authority prevents access to the home and this is initiated during the period of insurance due to possible or impending damage to an otherwise safe or sanitary home;

we will also pay or reimburse you for loss of rent from the date that the home becomes uninhabitable, provided that:

  1. the home was occupied by a tenant at the time of loss or prevention of access; or
  2. at the time of loss or prevention of access, you had a signed tenancy agreement for a new tenant to let the home for an ongoing period intended to be no less than 90 days.

We will pay:

  1. an amount equal to the average weekly rental you received for renting out the home during the weeks it was rented in the 12 months prior to the loss, or where a tenancy agreement was signed prior to the loss, the amount of the weekly rental in the agreement; and
  2. any other costs incurred with our written consent.

Where your claim for loss to the home is covered entirely by the Earthquake Commission, we will still pay your loss of rent under this Additional Benefit.

We will not pay your loss of rent where the home is not uninhabitable, or where tenants choose to or are encouraged to move out of your home while repair or rebuilding is effected.

The maximum that we will pay for loss of rent is:

  • for the period necessary to replace or repair the home, up to a maximum period of 12 months; or
  • where you don’t want the home rebuilt, up to two months.

Our liability for loss of rent will be subject to a maximum of $40,000 per dwelling unit or the amount shown on the schedule, whichever is higher, for any one event.

Whooping $40,000 limit per house for loss of rent.
In my office we recognise that the biggest worry overseas landlords have is when a claim happens and this is where we are providing our assistance and recommendations.
If you do not want to gamble with your rental property insurance please get in touch with my office and we will be very happy to look after your assets.

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