Help with Landlord Insurance Claim

Hi All,

Need some advise about landlord insurance claim. Abit of background,  My parents rental property has been completely trashed by the tenant growing cannabis. The leasing agent found the property abandon after trying to get in contact with them for several weeks, police report was filed and deem the property to have malicious damage. The police has also advised that the ids of the tenant we all fake.

The lease was for 12 months, 6 months inspection was fine, nothing was suss at that time. We currently hold landlord insurance with aami but we are having a issue with putting in a claim with them as they recently updated their pds with the following 

"Things we don’t cover"

Loss or damage to, or caused by, connected with or arising from, or liability caused by, connected with or arising from:

Illegal drugs and other chemical or poisonous substance

any unintentional or intentional use, existence or contamination by, of or due to:

• illegal drugs including but not limited to the manufacture, storage, use, possession, consumption or distribution of any illegal drugs (or illegal drug precursors);

• any other chemical or poisonous substance.”

They are using this as their way out to deny our claim. How are we the landlord have any control over the tenant action. There are no protection for the landlord

and this landlord policy is basically useless.

Is there anything we can do to challenge this?

Any help would be greatly appreciated. 

Thanks

Comments

  • -2

    Put your claim with AAMI first, as there were no issues during the initial inspection by the real estate agents.
    Or clean the avidence of drugs by your self then do a claim.
    Or find a lawyer.
    Or contact ozb help centre.

    Technically you haven't lodged a claim yet to deny anything.

    • I know my comment wasn't popular, but I have contacted the AAMI, this is there response:

      Regarding the illegal drug and other substances, if your tenant is involved or has any of that at the apartment/unit what the first consultant has provided in her answer regarding the product disclosure statement is correct.

      We won't be able to help you with any claims if illegal drugs or substances are at the property, hypothetically

      Hypothetically speaking, if your tenant is making/selling let's say for example at your property and like a fire happens due to the chemicals exploding - you won't be covered.

      Anything illegal will not be covered.

      Unfortunately since you're a landlord you won't know everything going on at the property, i understand that. I hope you never have to claim for anything like this.

      But now the question is, which insurance company actually cover this?

  • +3

    What does the PDS you signed up to say? Does it have those clauses? If so, you’re out of luck.

    If not, what’s the relevance of recently updated PDS you mention? Did you agree to this PDS change? If not, you may have a case.

  • +2

    I know its most peoples first impetus is to do the right thing, so you report it to the police, but you should think long and hard how that will affect you going forward.

    Just make a normal claim saying your tenants damaged your property, the onus will be on aami to prove the damage was caused by illegal drug use.

    I would get a solicitor involved, if an insurance company can change the pds after the fact then all insurance policies are basically worthless. Get legal advice.

    • +1

      … the onus will be on aami to prove the damage was caused by illegal drug use.

      Rough guess would say within 20 seconds of getting the police report will sort that out.

      • A police report is not proof of anything, it is conjecture. The police would need to actually take the offending parties to court and have them prosecuted for illegal drug offenses for the insurance to have tangible proof.

  • The insurance is renewed each year. When did the insurer insert the new clause?

    • The pds document date was updated in December 2020, renewal was April of this year 2021.We don't have the copy of pds that was posted with the renewal letter to compare with.

      • They should be able to provide it
        They should have all versions

        • The PDS is in the Links below.

  • +16

    I can assure you that insurance companies will always work tirelessly for their loyal customers…..to deny the claim.

  • The pds document date was updated in December 2020, renewal was April of this year 2021.

    • +1

      Then unfortunately the new clause will apply from April 2021

  • +1

    You may have to suck it up and just claim damage which is covered by the revised PDS. If you think it wasn't a legit change you can complain to the AFCA but check their complaints process first have to make certain attempts with the provider first.

    You may have a claim against the REA if you used one if they failed in their duty to vet the tenants properly. However of your parents rented it directly…

    • +1

      They are saying damages was cause by the growing of cannabis. We are currently go backs and forth with them arguing some of the damages, like broken doors, locks and certain rooms should be covered. The leased was through a REA.

  • So, did the leasing agent arrange the Insurance, receive the Renewal, notify of the Change of Terms of Cover, recommend alternate cover?

    Or did your Parents arrange and just Pay it?

    I'm sure AAMI would have included this update in…

    • My Parent organised the insurance. They just pay the renewal. I am sure the pds was included but my parents haven't kept that copy.
      Lesson learnt for them.

  • +4

    The way it reads is they can only deny damage directly connected to drugs. For example if the tenants ripped the walls and ceiling out of a room to grow drugs then that wouldn't be covered. But if the tenants punched holes in the walls then that would be covered by insurance.

    There is a dispute process that you can follow. That involves asking for an internal review, then raising a case with the ombudsman, and if all that fails and it makes financial sense you can hire a lawyer.

    Next time I recommend seeing an insurance broker for landlord insurance. They'll make sure you have adequate insurance to cover your needs.

    • Thanks for the info

      • +3

        Here is more info from the AAMI IDR process
        https://www.aami.com.au/contact/customer-relations-complaint...

        It's worth going through the process. It's free and only costs you time. The frontline claims staff only have limited authority. When you submit an official complaint the company will assign experts to resolve it and can decide to just settle the claim so that it doesn't go to the ombudsman.

    • +1

      But if the tenants punched holes in the walls then that would be covered by insurance.

      Or maybe the tenants punched holes in the walls cause they were high and outta control on drugs?

    • +4

      How is this fair for LL, we have no control over what the tenants will do. Even if you read everything in the pds you have no control over it

      • How is this fair for LL

        Im still waiting for god to supply me with a PDS on when/where/why life is fair.

      • How is this fair for landlords?

        I tell you why, you have an investment property and that investment came with potential risks and rewards.

        In this case the risks won the day.

        Sucks but it is what it is.

    • +1

      This is a bad take.

      I'm not going to think about every single possible scenario that a tenant might go through and make sure an insurance policy exists that covers off every single one. In fact, I'm pretty sure that doesn't exist.

      It's just pretty bad luck and TBH, a really shitty move by AAMI - seems like someone to avoid as a result.

  • +3

    How are LL's to know if tenants are into drugs? Alcoholics can wreck a place also but it seems that is ok?

    • Alcoholics can wreck a place also but it seems that is ok?

      Of course that's ok; alcohol is a good taxed drug.

  • Oh wow, sorry for your headaches and troubles OP. Hope you can get it sorted favorably.

  • +3

    Claim to agent insurance as public liability should cover as they are responsible to check identity and inspect home and report you . They failed both and that's why you paying for their service.plus you would save access.
    I would hell out of agent. Plus

  • If you read:
    https://www.aami.com.au/pds-update/landlord-insurance-change...
    you can see what cover AAMI was offering at the time of renewal.

  • +2

    The police has also advised that the ids of the tenant we all fake

    *Step 2 - Get a new leasing agent

  • +1

    They may cover some of the damage, they may not. Only one way to find out and lodge the claim.

    I'll also be asking what due diligence the Agent has taken before leasing out these tenants. Did they conduct a reference check and check their bank account statements.

    I think some insurers do not cover due to damage caused by cultivating illegal drugs as the costs to repair is massive.

    I.e. methamphetamine production may contaminate the plasterboard in the house so may have to be ripped out and replastered.. that's tens of thousands of dollars there.

    I'm with Zurich and can't find anything in the PDS to state otherwise so hopefully I'm covered for this but the tenants have been there for 2 years now so no risk of this with these clients.

  • Were the tenants listed here

    Surprised nobody suggested bikies yet..

  • Use some common sense here an insurer cannot change the terms of the insurance mid way.

    • The pds document date was updated in December 2020, renewal was April of this year 2021.

      • -1

        Guess it isn't as common sense as I'd expect.

        The pds document date was updated in December 2020, renewal was April of this year 2021.

        Is December 2020 before or on April of this year 2021. Yes, then that's the one you use.

        You use the one that applied to you on renewal.

  • -1

    Fine I'll do it for you OP

    Step 1: https://www.google.com/search?q=AAMI+PDS
    Step 2: Find Landlord https://www.aami.com.au/policy-documents/personal/landlord-i...
    Step 3: Get the PDS and NOTICE A CHAT BUTTON WHERE YOU COULD ASK AAMI THIS QUESTION JESUS.
    Step 4: Notice: This PDS applies to new policies purchased on or after 15 December 2020 and renewal policies commencing on or after 15 December 2020.

    Step 5: Goto https://www.aami.com.au/aami/documents/personal/home/aami-la...

    OMG IT IS THE PDS

    Step 6: Use the wayback machine: https://web.archive.org/web/*/https://www.aami.com.au/policy...

    Oh look we can see previous PDS.
    https://web.archive.org/web/20190406163807/https://www.aami....

    Step 7: Repeat after me OP. I will always keep a copy of my insurance details.

    • Nice work

  • -1

    This is a shitty situation but I still cannot get over that landlords never expect to lose money on their investment. If something goes wrong they always expect to be fully indemnified.

    Property is not risk free. You took that property from a first home buyer and when you did you took on the risk of it all going pear shaped.

    It’s the agents fault, the tenants fault, the police fault, the insurance fault…. Nope, it’s just a thing that happened and unfortunately it will cost you.

    • True and insurance generally just mitigates your exposure.

      • Insurance is for transfer of risk.