P Lab Contamination could rival leaky homes losses

The New Zealand Herald has recently put the spotlight on a major issue affecting houses all over the country, P Labs. Homeowners are forking out millions of dollars to decontaminate P-riddled properties in a crisis that could rival the leaky homes disaster.

In the worst cases, contaminated houses are destroyed. An industry specialist says 40 per cent of homes he tests contain traces of methamphetamine, known as P.

Housing NZ spends about $12 million to $13 million a year on remedial work. Five of its properties were demolished in the 2015 financial year because they were damaged beyond repair. But the problem isn’t confined to poorer areas and has seeped into even the most exclusive streets. A property on the market in a high-end suburb of Auckland was contaminated during a chemical explosion from a suspected P lab in the garage in 2005.

Home Owners and Buyers Association president John Gray said he knew of six homes that cost about $250,000 to decontaminate. Invariably the clean-up ranges from $1000 to a few hundred thousand, with hefty replacement costs for furnishings, curtains and wall coverings too.

From a risk management perspective, as a landlord you should have a systematic process for performing regular checks and meth testing at your property – before, during and after a tenant vacates.  The cost of a contamination event at your property could be substantial, however if effective inspections and processes are put in place then this risk can be mitigated.   Swab test kits can be purchased online and they provide an indication of contamination.  A full laboratory evidential test is required to confirm the exact level of contamination.

On the insurance front – not all insurance policies are equal. It is therefore critical that you check the cover you have in place, specifically relating to P Lab cover. Most insurers do not offer P Lab insurance cover as part of their offer.  We are pleased to advise that over the years the Initio has successfully responded to a number of P Lab contamination claims.   We are seeing an increase in incidence of these types of losses, and no two P-lab claims are the same and each claim turns on its own set of facts.  When receiving a P-Lab claim we take account of the landlords approach to property inspections which at a minimum should be every 6 months (refer policy wording).

A timely reminder that regardless of  who your rental property insurer is, you should make sure you have a good risk management in place.

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