Sam owns a property in the Hawkes Bay, which he originally tenanted under tenancy agreements. However, in 2018, he started using the property as an Airbnb. In January 2023, a weather event caused water damage to the wall and carpet. Sam contacted his insurance broker to assist him to make a claim to his insurer for the damage and for his loss of income from the cancelled Airbnb bookings while the damage was being fixed.
Sam and his insurer discussed Sam’s claim, and the insurer decided that Sam was covered for the damage but not the loss of income. This was because Sam’s property was insured, as at early January 2023, as a standard tenanted property not an Airbnb. Sam complained to his insurance broker’s internal complaints process that his broker had not ensured his property was properly insured. Sam received a final response from the broker that Sam never told the broker he had changed the property to an Airbnb. Sam then complained to FSCL.
Dispute
Sam said he had called his broker prior to the weather event in January 2023 to tell them that the property was now being used as an Airbnb. He said the broker failed to update his cover. Sam was unable to provide any specific details about when he made the call and said he must have made it at some point in the last six years or so. The broker had no record of the call happening and said they had not caused the property to be incorrectly insured.
Review
We determined, on the balance of probabilities, that it was more likely than not that Sam had not told his broker that the property became an Airbnb. Sam was unable to provide any detail about the call, such as the approximate date, who he talked to, or the things they spoke about, and the broker had no record of the call. We considered it possible that Sam may have made the call about his other property in Hamilton (which was also used as an Airbnb) rather than the Hawkes Bay property.
We also said that even if Sam had been able to prove that the call occurred, we would not have awarded any compensation for his loss of income. We noted that the insurer’s assessor calculated the loss of income at only $1,860. We would have then taken into account that Sam had contributed to his loss (by at least half) because he had not seen and queried that the occupancy of the property on his schedule was noted as ‘tenanted’. We would have also taken into account that Sam would have had to pay additional premium for six years to have the property insured as an Airbnb. These two factors combined would likely offset all the possible $1,860 compensation for lost income.
Resolution
Sam did not accept our Ombudsman’s final decision, so we closed our file.
Insights for consumers and participants
Consumers should ensure that any changes to the purpose or use of a property, including the occupancy of a property, are communicated with their broker or insurer and that their policies are kept up to date.
