The risk for landlords
Traces of meth can make your tenants sick, devalue your property and ultimately cost you financially.
P testing and decontamination company, MethSolutions, estimate 20,000 to 40,000 P labs in existence. Meth use also causes contamination and national meth use figures sit at around 1 per cent of the general population, which equates to about 10,000 to 16,000 households.
Because of the growing publicity of methamphetamine manufacture and use, residential landlords are being held liable even when there was no knowledge of contamination. The Tenancy Tribunal recently ruled a landlord pay $7,500 to a family who rented a methamphetamine-contaminated Tuakau property, to cover rent paid and the cost of dumping their ruined belongings.
Decontamination costs can range from $5000 to $50,000 for the property owner.
When there is severe contamination houses are demolished, the ground scraped and neighbouring houses decontaminated also.
How to protect your property from contamination
- Do a full check on potential tenants to identify any likely drug use.
- Carry out 3 monthly property inspections looking for potential P lab signs.
- Test your property for meth between and during tenancies.
- Check for signs your property may be being used as a P lab between and during tenancies
- unusual chemical smells that are not normally present in the area
- stained glass equipment and cookware
- numerous cold tablet packages lying around or in the rubbish
- portable gas tanks or other cylinders not normally seen or used in the area
- chemical stains around household kitchen sink, laundry, toilet or storm water drains
- yellow/brown staining of interior floor, wall, ceiling and appliance surfaces.
- Install a meth alarm. A silent alarm system similar to a smoke alarm designed to detect the manufacture of methamphetamine in your property.
What does my landlords insurance cover?
Policies vary greatly. There are differing levels of cover and different terms under which the cover would apply or not. The Q&A below addresses common questions landlords have but make sure you talk to your broker and understand where you stand if meth was discovered in your property.
For concerns or advice talk to a Rothbury broker, - we know the ins and outs of the policies available to you.
7 common questions about insuring against P
Q1. Does my landlords insurance cover damage and contamination caused by a meth lab?
A. Depending on who provides your insurance you should have some level of cover for your property. A policy will generally exclude all damage related to Meth or Hazardous Substance contamination, however there will usually also be a special section in the policy wording that will provide a ‘sub limit’ to help with clean up. Your broker will be able to confirm what applies for you.
Q2. Am I covered for contamination caused by meth smoked in the property?
A. As above, there is usually a special section in your landlords policy that will provide a 'sub limit' to help with making your property clean.
Q3. What are the common limits?
A. if your policy covers meth contamination is likely to be limited to between $25,000 and $50,000 depending on your insurer. Your broker will give you advice on the limits of different policies.
Q4. What are the requirements of the policy?
A. Policy requirements differ from insurer to insurer.
From my experience of available policies and claims, I recommend the minimum requirements are:
- to carry out multiple references before you let a tenant use your property
- do quarterly inspections of your property and keep a record of these inspections.
These inspections and references help limit the risk to you as the property owner and assist in keeping any damage under your policy limit. They will also support your case should you have a claim.
Q5. Am I covered for loss of rent while the property is being decontaminated?
A. Provided you select this option for your tenanted property, if the loss that causes your home to be uninhabitable is covered then your loss of rent should be covered also. Your specific policy will detail the amount of cover and the length of time you would be covered.
Q6. If the property is furnished does the insurance cover the cost of replacement or decontamination of furniture and furnishings?
A. Most landlord policies provide cover for ‘Landlords Chattels and Contents’ as an optional extension to your policy. Provided you select this cover option, if the loss that causes your chattels and contents to be damaged is covered, then this loss should be covered also.
Q7. Do policies require a methamphetamine test before each tenancy?
A. Currently there is no requirement to have the home tested between each tenancy. However a Tenancy Tribunal adjudicator recently stated, "Any landlord who, in 2015 or 2016, rents out his or her premises without having it tested for methamphetamine contamination at the commencement of the tenancy is taking on a large risk in a number of respects." He then went on to rule a landlord pay $7,500 to a tenant.
As a minimum I recommend in between tenancies, if you suspect that there has been use or production of meth at your property, to have it tested. In the scenario where meth is present, you should be able to recover some of your loss from your insurer to some extent.
About the AuthorName: Amy Webb
I am a Domestic Broker at Rothbury’s Auckland branch. I have spent 4 years in the insurance industry so far and enjoy broking as it means I get to help clients daily.
I am a Domestic Broker at Rothbury’s Auckland branch. I have spent 4 years in the insurance industry so far and enjoy broking as it means I get to help clients daily.Close
Feedback & CommentsComment:
Thanks for compiling this very vital and up to date information, Stu.
Added By: Susan Templeton Date: August 17 , 2016