Insurance Changes to the Residential Tenancies Act

As of 27 August 2019, there were further changes to landlord obligations under the Residential Tenancies Act that will affect the liability residential tenants have to landlords for accidental damage.

Insurance Changes to the Residential Tenancies Act

Landlords can now seek recovery from tenants or accidental damage subject to a cap of the lesser of the landlord’s policy excess or 4 weeks rent. The new changes will also prevent insurers from pursuing tenants for any accidental damage costs above the capped amount.

As a consequence, landlords may consider increasing their policy excess (although the landlord will still have to pay the excess for losses other than accidental damage by tenants).

To clarify, if tenants or their guests cause careless damage in a rental property, they will be liable for the cost of the damage of up to four weeks’ rent or the landlord’s insurance excess, whichever is lower.

As your property managers we also need to include a disclosure statement at the start of a new tenancy and or during any change or extension of a tenancy agreement whether the owner is insured, their excess amount (as this related to the tenant’s liability and potential costs for damage). Landlords also need to be able to provide a copy of their policy on request. 

However, we still need to prove the damage occurred during the tenancy and was not simply fair wear and tear. The tenants must also prove the damage was not intentional if they cannot then the tenant is still liable for costs.

Rest assured, Click Property Management will (as usual) be keeping an eye on Tenancy Services tribunal rulings going forward especially in relation to setting precedents.

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