Fatima rented out a property that she owned in Auckland. During the 2023 Auckland Anniversary floods, a landslip from a neighbouring property damaged Famita’s deck. Fatima said that part of the gutter at her property was also damaged by the weather.
The local council assessed the damage at Fatima’s property and issued a yellow sticker, as they said that the deck was not safe to use. As the tenants were not allowed to use the deck, Fatima offered them a rent reduction of $50 per week.
Fatima made an insurance claim for the loss of rent, and the damage to the gutter.
Dispute
The insurer hired a builder to assess the damage at the property. The builder found that the gutter had maintenance issues and was rusty. The insurer declined Fatima’s claim for this damage, as they said the policy did not provide cover for any loss or damage caused by normal maintenance or corrosion.
The insurer also declined Fatima’s claim for loss of rent. They explained that the policy only provided cover for loss of rent if the damage made the property ‘unhabitable’. The insurer said as that the tenants were still able to live in the property, it was considered habitable.
Fatima did not agree that the gutter had maintenance issues, as she said it had been cleaned every year. Fatima explained that it was not rust on the gutter, it was a layer of green patina that protected the gutter.
Fatima pointed out that there was another loss of rent section in her policy. This section said that the insurer will cover loss of rent incurred because of damage to the property. Fatima thought that this section should apply.
Review
We agreed with the insurer that they did not have to cover the damage to the gutter. The builder who was hired to assess the damage was suitably qualified and experienced, so we thought it was reasonable to accept their findings. We told Fatima that if she wanted to dispute the builder’s finding, she would need to get a report from a qualified expert, supporting her view.
We found that, under the policy section the insurer identified, cover was not available for loss of rent. This was because the property was not uninhabitable.
However, we agreed with Fatima that loss of rent cover was available under a different section of the policy. As the loss of rent was due to the damage to the property, the insurer was required to cover the difference between the rent the tenants were now paying, and the rent that would have been paid if the damage had not occurred. We were satisfied that this section applied, and that the insurer must cover the loss of rent until the deck had been fixed.
Resolution
The insurer accepted that cover was available for loss of rent. However, they disagreed with the amount of time they should cover the loss of rent payments for. The insurer thought it was unfair to ask them to cover the payments until Fatima got around to completing the repairs. We accepted the insurer’s view and decided that it was fair for them to cover loss of rent payments for a further 12 months, as this gave Fatima enough time to repair the deck.
Insights for consumers
If you think your insurer has incorrectly assessed your claim, it is helpful to get an independent review. In this case, the insurer had declined Fatima’s claim under one section of the policy, and they did not identify that cover was available under a different section.
