Some of our tenant clients find themselves being pursued for large amounts of money when an insurer pays the landlord but alleges the tenant was negligent. However, this risk doesn’t just face tenants but anyone who stays in someone else’s home, such as a holiday home.
Our clients Malik and Adela (not their real names) had been renting since they arrived in Australia, but had managed save up a deposit to buy their own home. While still in their rented home, some oil caught fire while they were cooking, and caused significant damage to the kitchen. The landlord’s insurer paid the claim and the kitchen was repaired. However, six months later, when Malik and Adela were in their new home, they received a letter from their previous landlord’s insurer demanding payment of $30,000 for the accidental damage to the kitchen. While the landlord was insured, they had no insurance that would cover them for this negligence claim, and the only way they could pay that amount was to sell their new house.
However, this is not just a risk for long-term tenants – it can even be a risk for people renting holiday homes.
There are a number of issues of fairness and appropriate corporate conduct when it comes to how some (though by no means all) insurers deal with former tenants and occupants of these homes. Some insurers will fail to have taken full initial statements from those present at the fire, or assess contributing factors (like errors and shortcuts in construction) to the spread of a fire or a flood. They may also impose a standard on tenants higher than that applicable under the applicable state or territory tenancy law. Other insurers may refer debts straight off to a collection agency who does not bother to identify who it acts for, the basis of the claim, or may try to pressure the allegedly liable tenants into unreasonable terms of settlement.
People who have house insurance, or contents insurance, may have public liability insurance that could cover such an event. However, we believe it’s impractical, and unfair, for insurers to pursue uninsured renters for accidental damage.
If you’re a landlord who cares about your tenants – or even if you only rent out a house during the holidays – ask your insurer whether the insurer will pursue tenants, or even your friends or relatives, for any accidental damage. Unless they say “no”, we suggest you find another insurer.
If you would like to discuss, contact Joe Nunweek, Senior Lawyer, on firstname.lastname@example.org