Austin rented out a property that he owned in Auckland. In February 2023, Austin’s tenants started to complain about a rattling noise near the sliding door in the bedroom. The tenants explained that they could hear the noise whenever it was windy, and that sometimes it was so loud they had to sleep in the lounge instead.
The tenants declined to renew their lease in November, due to the noise. After the tenants moved out, Austin asked a contractor to investigate and resolve the issue. The contractor found that the steel stud by the sliding door had not been screwed into the concrete wall. This meant that when it was windy, the steel stud vibrated against the concrete wall, causing the noise. The contractor fixed the issue, and Austin put the property back up for rent.
Austin explained that he was unable to rent out the property until the issue had been resolved, so the property was untenanted for six weeks. Austin made an insurance claim for six weeks’ loss of rent cover, but the insurer declined his claim.
Dispute
Austin believed that loss of rent cover should be available, as he was unable to rent out the property until the issue with the noise had been resolved.
The insurer declined to cover Austin’s claim, as they said the operative clause of the policy had not been triggered. The insurer said that Austin needed to show that there had been loss or damage to the property, that resulted in the loss of rent.
Review
We agreed with the insurer. The policy said that the insurer would indemnify Austin for physical loss or damage to the property, and that they would provide loss of rent cover if the loss or damage impacted Austin’s rental income.
The contractor Austin hired stated that the steel stud was loose, as it had not been screwed into the concrete wall. They said there was no evidence that the steel stud had ever been screwed in place.
Based on these findings, it was quite clear that there was no physical loss or damage to the sliding door. Rather, the steel stud was loose because it had never been screwed in place to begin with.
We explained that as there was no evidence of physical loss or damage to the property, cover for loss of rent would not be available.
Resolution
Austin did not respond, so we considered that he accepted our view, and we closed our investigation.
Insights for consumers
All insurance policies have an operative clause that sets out when cover will be available. It is important for consumers to ensure they have read and understood the operative clause.
