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The new Residential Tenancies Act 2019 Amendment has been in force for less than a month and it has serious implications for tenants. Tenants are now liable for careless damage caused to rental properties. They could face the lower of four weeks’ rent, or their landlord’s insurance excess. Damages can result in a hefty cost to both the landlord’s property and third parties. Fortunately, with a bit of foresight, contents insurance could be the solution.

Bonded’s team of specialist insurance brokers have worked across sectors for years and noticed that confusion still remains around what contents insurance can cover.

Residential Tenancies Act

What does contents insurance cover?

Contents insurance covers the contents of a home: furniture, clothes, appliances, tools and sports items and personal liability to someone else’s property, including damage to a rental property.

Tenant caused the damage: Who pays?

With regards to the new careless damage stipulation coming into law, this is something important for tenants to have. This is because the careless damage liability can be referred to the Tenancy Tribunal if not paid, and must be paid whether or not the tenant responsible has contents insurance.

Our team therefore encourages all tenants have their own contents insurance to cover them for liability for damage they may accidentally cause to other people’s property and replacement to their own possessions in the event of a natural disaster, break-in or other incident.

How do landlords’ and tenants’ policies differ?

Typically, the tenant’s contents insurance policy covers the value of their personal possessions, and their personal liability for accidental damage to fixtures and fittings of a rental property, such as benches, appliances, carpets, and curtains.

Landlord Responsibilities NZ

Aside from where they are damaged accidentally by a tenant, fixtures and fittings are covered under the landlord’s contents policy.

How do contents policies work for multiple flatmates sharing a home?

Where there are multiple flatmates, if there’s a sudden event, such as a burst water pipe or a leaking hot water cylinder, each flatmate is generally responsible for their own items, covered by their personal contents insurance policy.

The landlord’s responsibility lies in repairing any damage to the rental property, either through their insurance or privately.

These sudden events do not often arise due to careless tenant action, so flatmates shouldn’t need to make any payment towards damage to the property itself.

What cover can contents insurance provide in the event of rental burglary?

Where there’s a burglary, each tenant’s personal effects are covered under their individual contents insurance policy. The landlord’s responsibility is to repair the effects of forced entry – such as doors and windows, in addition to any other damage caused to the home by this incident.

Residential Tenancies Act 2019 Amendments: Key takeaway.

New tenancy law states the tenant is now responsible for careless damage payments. Contents insurance means you can completely avoid the possibility of paying up to four weeks rent, which is a significant amount for most. Our team at Bonded NZ Ltd recommends you have contents insurance and review it regularly.