Two instances when your tenants’ actions make claiming impossible.
July 23, 2021
Being a Landlord can be tricky when it comes to tenants at the best of times, here are a couple of examples where the tenants made claiming on insurance impossible…
Drug use by tenants isn’t covered under “malicious damage”
A landlord lost a claim dispute with Suncorp after her tenants smoked methamphetamine, causing dangerous chemical contamination of the walls, ceilings and other surfaces.
The property owner held landlord insurance and lodged a claim for loss of rent and the cost of rectifying the uninhabitable property after the tenants vacated.
The house required extensive repairs, including replacement of the air-conditioning unit and decontamination of the walls, ceilings, windows and window frames and re-painting.
Suncorp accepted some damage was malicious, agreeing to cover holes kicked or punched in walls, cracked doors and the removal of carpet by the tenant, as well as $2800 for loss of rent, which was the maximum under the policy. Suncorp also identified theft and broken glass as areas it was liable if the woman were to claim.
However, it denied the balance of her claim on the basis the contamination was caused by methamphetamine use, rather than production. This meant it was not “malicious” under the terms of the policy, the insurer said.
AFCA agreed Suncorp was entitled to deny liability for contamination remediation, associated damage and removal of debris.
“Malice involves an element of intent and I do not consider it has been shown they used the drug with the intention of causing damage,” the ruling states.
Optional cover was available for accidental damage by tenants or their guests, however the landlord did not select that option.
In a similar ruling, AFCA upheld a decision by Commonwealth Insurance to decline a claim for fire damage at an investment property that was likely caused by electrical equipment installed by the tenant for cultivating cannabis.
AFCA said the insurer is entitled to reject the claim since the investment home insurance policy excludes illegal activities carried out by a tenant.
The loss would have been covered had the complainant taken up the optional cover available for malicious damage and theft by a tenant, but she did not.
Death of a tenant is also not malicious damage
A landlord in Queensland who submitted an insurance claim for damage to a holiday unit after discovering a tenant’s decomposing body lost their dispute with Suncorp.
The landlord, who held a Suncorp investor home and contents insurance policy, said the damage was so severe and difficult to rectify that the unit was a total loss.
The police reported the death as “undetermined” and the landlord said murder or suicide could not be ruled out, which should fall within the policy’s “vandalism and malicious damage by tenants or their guests” coverage.
Suncorp declined the claim, saying the death was accidental and the landlord’s broker had not selected optional accidental cover.
AFCA ruled the damage was not covered and that Suncorp acted reasonably and fairly in assessing the claim.
“The available information suggests the tenant died of natural causes and the damage to the property that followed was accidental in that it was unintended and unexpected,” AFCA said.
“The only way the policy would cover the damage suffered by the complainant is the optional cover for ‘accidental damage’. As this option was not taken by the complainant, the insurer is entitled to decline the claim.”