When people think about claims, they generally jump to their own worst fear of their property burning to the ground - that’s exactly why we all buy insurance. Marketing hypes insurance products as providing “peace of mind”, but what you’re literally purchasing is compensation in the event you submit a claim – and a reasonable expectation that any such claim will be processed and paid to you. So, what do you need to know about claims when it comes to your property insurance?

Don’t Sweat The Small Stuff

Claims are there for the major events think fire, earthquake, storm damage but also the slightly smaller but still very costly incidents, such as a leaking pipe that damages flooring that your tenant didn’t notice. Insurance isn’t there for the day-to-day maintenance of a property, so don’t use your policy for repairs, wear and tear, and upkeep, as your insurer may deny those types of claims.

What About Damage And New Legislation?

The recent amendments to the Residential Tenancies Act provide that a tenant is liable to pay their landlord’s insurance excess or four weeks’ rent – whichever is lesser – but only for careless or intentional damage. Accidental damage, such as spilling a glass of red wine onto fluffy white carpet, may still be the responsibility of the landlord; further Government guidance and future Tenancy Tribunal decisions will provide
more certainty on this. A snapshot of Initio’s last 12 months of rental property claims shows that unexpected events such as house fires and storms take the lion’s share of the number and value of claims (see table above).

What Types Of Claims Are The Most Common?

As the insurance provider to over $2.5 billion of Kiwi property, Initio has its fair share of claims. In the last 12 months to end of August 2019, our four most common claims in order:
#1 Sudden water leak (for example: burst pipe) - average claim value $5,916
#2 Tenant damage (for example: malicious damage) – average claim value $2,960
#3 Weather damage (for example: storm, flood) – average claim value $5,732
#4 Hidden gradual water damage (for example: slow dripping pipe) – average claim value $1,980. The best insurance is the proactive management of the risks faced by the property. Actively keeping an eye on areas where hidden leaks are most likely to occur will reduce the likelihood of damage. should you get hit with a nasty loss, that’s what insurance is for.

Take Action

Many customers seem to think that they must leave their water-sodden carpet festering away until the insurance assessor turns up or their insurer says it can be taken out. This is definitely not the case. My advice is to act and to start the clean-up process; take photos and get on with things. It is important to note that most insurers want you to take steps to reduce any further loss, and take actions that align with this.
The exception here is fire damage; following a fire you will want to take steps to secure the property (such as boarding up entry doors) but you should leave the property as is so that fire investigators have the best chance of determining the origin of the fire.

Know The Process

The process around submitting and receiving payment for claims can be frustrating if you don’t know how long you’ll be kept waiting, and what is required of you as a claimant. So, when choosing an insurer, it’s good to take the time to understand this upfront – so if and when you suffer a loss, you know what to expect and have confidence in the process.