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Covering yourself for an unexpected event that leads to damage and financial loss is exactly what insurance is for. For house and contents insurance, you are most likely to think of your typical risks that might include fire, property flooding or theft of contents. However, insurance goes much further the ‘usual’ losses.

At initio we come across our fair share of unusual claims. As part of our ‘2019 in Review’ we go over our top 5 most unexpected claims – with a few honourable mentions. We are calling this the ‘Annual Initio Claims Awards’

Expect the Unexpected?

#1.   Runaway Trailer

Sometimes damage can come from something outside of your control and your property. In late 2019, an initio customer in Te Awamutu was taken by surprise by a runaway trailer.   Concrete was being laid at the building site next door and one the contractors loaded trailers became unhitched. The trailer was sent rolling down the hill and ended its journey by colliding the corner of our customers house and garage door.

This resulted in significant damage to the interior lining, exterior cladding and the garage door.  Lucky for the insured their vehicles were not parked in the garage at the time, however a shelving unit and set of golf clubs were also destroyed.  Saturday golf was put on hold unfortunately.

Total claim cost $19,187.  In this instance, the concrete layers public liability insurer was pursued for the costs of this claim.

# 2.  Colouring-in competition 

When a customer rented their holiday home to short term guests they were not counting on their TV taking part in a kids colouring competition.   The guest’s toddler thought they would hone their colouring in skills on the large flatscreen TV.

The artistic crayon drawings were cleaned off but the hard crayons left permanent scratches across the screen that could not be removed.  A claim was made under their ‘landlord-holiday home contents’ which meant that the homeowner was able to replace their TV.

#3 .  The Phantom Bather

An initio client with a multi-unit rental property was expecting it to be unoccupied for eleven days between tenancies.  Two days into the property being untenanted, they received a call from their neighbour to say that there was water coming out of the property.  It appeared an intruder had entered the property gone up the stairs and decided to run a bath.

Extensive water damage included saturated carpet upstairs that then seeped through the floor to downstairs. The ceiling in the kitchen and dining room downstairs collapsed, and significant water damage and clean-up was required through the property.

While we don’t know what the motives were for running the bath, we know that the landlord was happy to have an initio landlord insurance policy come to the rescue.  With further costs still to come in the claim cost of repairs so far exceeds $32,000.  

#4 .  Rampant Puppies

After a tenancy had ended at an initio rental property early in 2019, an initio client lodged a claim for damage to the underfloor insulation. When repairers investigated the cause of loss, it appeared that the previous tenants family of puppies had found their way under the house, and shredded the flooring insulation from below.

Unlike many domestic insurance policies in New Zealand, the initio landlord insurance policy does not exclude damage caused by pets.  After the landlord’s excess, Initio paid out $2,225.16 to repair and reinstate the insulation.

#5.  Clumsy Chopping Board

While renting a holiday home, the guests popped down the road only to return to water running out the front door.  They certainly didn’t expect to find water everywhere, a swelling to the kitchen, kitchen bench, cupboards, walls and floor.

It turns out that while they were out of the house a bread chopping board fell from its stand and landed on the sink tap. Not only did this turn the tap on, the awkward way it landed meant it also redirected the water away from the sink, running down the bread board and into the kitchen cabinets.

The aftermath damage resulted in water damage to the kitchen structures, damage to electrical components, and loss of rent payments as the sodden kitchen meant the property could no longer be rented.  Total repairs amounted to $21,151.38 and are covered as sudden accidental water damage under the customers initio holiday home policy.

2019’s Honourable Vehicle v House Mentions

From AirBnB guests throwing a party to lightning strikes – we have had some interesting ‘honourable mentions’ lodged throughout the year.

Six claims were lodged with initio in 2019 for vehicle damage to properties – where a member of the public lost control of their vehicle and damaged our customers houses.

Three were involved in a police chase, whilst a further two were caused at the hands of drunk drivers.

Drivers who are responsible for damage caused are liable to cover the costs of repair. However in reality it’s difficult to get those responsible to accept liability (especially where it involves a police chase or drunk driving).  Regardless of the driver accepting responsibility or being insured themselves (not that they would have insurance if drunk or in a police chase) initio provides cover for the damage caused to the property.  We then pursue the driver.

The average claim for vehicle house damage in 2019 was $4,761.

‘Expect the Unexpected’ – You never know what could happen to your property. This is why it’s best to make sure you are covered for such unexpected and unusual events.

For more information on insuring different types see our insurance covers designed specifically for:

Home Insurance – for your own home, and contents.
Holiday Home Insurance – for the bach and for holiday homes that are also rented out (eg Bookabach, AirBnB)
Landlord Insurance – all in one house and landlord insurance, including loss of rents, malicious damage & more.

Christmas is the busiest time of year …. for burglars.  House insurance is just one part of managing your house and contents risk.  Heres a guide on protecting your property.

It’s coming into that time of year where we like to take a load off – relax for a couple of weeks, put the feet up at the bach, or even head off overseas – but it’s also the time of year when burglars tend to be more active. Leaving houses empty for periods of time can be risky in several ways, and among other factors, result in an uptick of property insurance claims. We’ve all seen Home Alone!

Holiday homes are particularly vulnerable as they are often left unoccupied for extended periods of time, but even our own homes need to stay secure and damage-free over the silly season.

Burglary prevention is equally important for holiday homeowners, landlords, and people with a single main residence. Importantly, burglary isn’t only about having your contents stolen, but also the fact that thieves can cause significant damage to other possessions and the property itself whilst trying to gain access.

Property insurance cover is designed to protect you if the worst should happen, but as a property owner there are several steps you can take to avoid having to deal with the heartache and distress of someone illegally entering your property, and ultimately having to make a claim on your policy.  

Prevent opportunistic burglars from targeting your property by:

• Keeping all valuables out of sight. Gifts under the tree are tempting for thieves so make sure they, and other valuables, can’t be seen from the outside the home. Also be careful when disposing of any tell-tale packaging
• Checking window joinery, and promptly replacing or repairing any loose latches
• Installing security stays on windows
• Fitting deadlocks or deadbolts to all external doors, especially older doors and ranch sliders which can be more easily broken into
• Installing a burglar alarm and advertising the presence of an alarm
• Installing exterior sensor lights, and checking any existing lights are working correctly

If possible, make it difficult for someone to break into your home. Trim trees and shrubs so there are no places for burglars to hide and move wheelie bins and other large objects away from fences, ledges and drop-offs wherever possible. Lock your shed and put away any tools, to remove the temptation of them being used to aid access.

Something else to consider is not advertising that you are away: keep your lawns mowed, gardens tidy, the mailbox clear and avoid leaving messages on social networking sites and answering machines with dates and other specific details of your absence. Let your neighbours know if you’re going to be away, give them your contact phone number, and have if you a good relationship with your neighbour – ask them to clear your mail, or park in your driveway to keep up the ruse. 

Good security makes people feel safe; it also has the added benefit of retaining good and long-term tenants – and for holiday homes, a reputation for a safe and secure property.

This week, law changes to the Residential Tenancies legislation is set to strengthen renter’s rights. It aims to transition a landlord’s rental house into a tenant’s home.  

Looking specifically at landlord insurance, the change that will have the most ramifications on landlord insurance is the removal of no-cause evictions. Essentially, it will be more difficult for landlord’s to remove bad tenants and from a risk management perspective this is not a good thing. Other changes to the legislation such as limiting rent increases, and banning rent bidding are unlikely to have a direct impact on landlord insurance.

Landlord insurance provides cover for intentional damage by tenants. If troublesome tenants are harder to remove then landlord insurers will consider that there is a higher risk that the tenant will cause damage to the property. It remains to be seen but this could lead to an increase in the value of deliberate damage insurance claims. Working out how and when the damage occurred could be further protracted when there is a tenant that is unwilling to co-operate and cannot be removed from the property. It has always been about working with the landlord, the tenant, and the property manager (if applicable) and this will not change when it comes to insurance.

While tenant damage could increase under the new rules, the legislation changes could in fact improve risk management and reduce the incidence of damage. Our view is that with bad tenants being hard to evict, it will mean that landlords increase their scrutiny during tenant selection. So, ultimately tenants with a poor record and lack of supporting references may find it harder to get rent a property, which would filter out bad tenants and lead to lower claims payouts for insurers.

The ultimate outcome of the law changes is difficult to predict. It is unlikely that insurers will make any adjustments to premiums or policy conditions as a result of the reforms.

The bulk of the legislative changes are set to be put into practice in early 2021. We expect that it will take at least 12 months before we see any outcomes or trends on claims.

About Initio

Initio is a New Zealand-based online house insurance provider.  Founded in 2011 by a couple of Kiwis, Initio set out to change the broken insurance industry by using technology to put control back into the hands of the customer.

Covering landlord insurance, short-term holiday rentals and home and contents, Initio specialises in tailored online property insurance, including an all-in-one landlord insurance with built-in cover for loss of rent and damage by the tenant.

Having completed over 35,000 automated insurance transactions, Initio’s market-leading policies can be quoted, bought and amended online – all in an instant.

Initio is underwritten by NZI, a business division of IAG New Zealand Limited.

A candid take on initio’s approach to you and your home

At initio we are ‘all-in’ on customer experience.  We ruthlessly pursue customer satisfaction with our technology, support and communications …. But only for a certain type of customer.  In short, we are not for everyone.   

Yes, we’re audacious enough to say: “Sorry, we can’t be your insurance provider” – at least not if it means compromising the ethos that underpins our brand, or transacting with you in a way that doesn’t celebrate the use of our tech.  We provide superior ease of insurance and customer service, but only to a specific kind of customer who appreciates and respects our ‘digital by default’ approach.  

Catering to the Modern, Digital-Savvy Customer

Our business model is laser-focused on a modern, self-reliant breed of customers. The digital age has dramatically reshaped the insurance industry, and initio remains at the forefront of this transformation. We are designed for customers who value autonomy, speed, and convenience, rather than the traditional, hands-on approach.

Customers who are comfortable transacting online, managing their property portfolios with digital tools, and who comprehend that competitive premiums and high-touch hand-holding services are often mutually exclusive, are our ideal clientele.  For these customers we are digital by default, and human when you need us. 

The Interplay of Technology and Affordability

“Why can’t you just start the policy for me over the phone”

“Why don’t you call me every year when my policy renews so we can have a chat about it”  

“Why can’t you just send me your bank account and I’ll transfer the premium funds”  

“Send me a quote”  

It’s a ‘no’ on all fronts.  The truth is, high-touch insurance services involve considerable operational costs – think travel, long-winded phone calls, time, and administration.   We’ve spent over 10 years building a digital platform that substitutes for these things; its frictionless insurance, that’s quote in one click, cover in 2 minutes, claim in an instant.  By utilising technology to automate many aspects of our services, we increase efficiency and are able to offer competitive pricing.  

Our system has been designed to suit a certain type of customer, and it’s not for everyone.  

This doesn’t mean we shirk our responsibility to our customers that embrace our technology.  Quite the contrary – we provide comprehensive digital and phone support, and abundant online resources to help.    

Why we decline to insure some houses

Sometimes we have to say no to insuring your house.  It’s not you, or your house, it’s simply the way we want to run our business and the rules we, and our insurer, have had to create to be able to offer our services long-term.  

It’s digital too:  The primary decision making on whether or not to insure your property is done by a smart tool we built called ‘Locatio’.  When you type in your address with initio, Locatio makes decisions about whether initio can provide cover by using things like council property data, flood maps, earthquake and land risk. 

In order to remain a sustainable and successful insurance provider we choose to focus on certain types of houses, and this means that there are some locations where we can’t provide cover, and certain risk exposures such as flood or land instability that are just not our bag.  

We are constantly updating our business and underwriting rules, so just because we say no today, doesn’t mean that it’s a no forever.   

You also need to know that we cannot sell you something that isn’t right for your situation either.  So if your property does not fit our product we’ll decline to provide cover, and we don’t mean any offence by this. 

The cost is the cost

A number of factors go into calculating the total cost of your home insurance, including location, age of the property, and other things like government-imposed levies.   Our award-winning insurance technology computes the insurance cost, and we rely on that to run our business.  The premiums need to be set at a level that allows the insurer the margins to continue to pay claims and reinsurance costs.  In short, the cost is the cost. 

Learn more about how the insurance risk component of your insurance cost is calculated 

It’s 100% your choice whether or not to accept the insurance cost we offer.  You can ring or email and challenge a cost but ultimately it’s out of our hands as the system has spoken.  You need to know though that we work incredibly hard to maintain competitive premiums for our customers.  We do this by continually investing in our technology for efficient processes, negotiations with our insurer, constantly refining the rules that determine how risky our portfolio of houses is (ultimately the more aggregated risk we take on, the bigger our premium pool needs to be).  

Our efforts to keep premiums competitive have been confirmed by feedback from our customers and also by financial resource websites like Moneyhub.  

Source:  Moneyhub 

 It’s simply not possible to be the most competitive all of the time, and we implore our customers to take a long and holistic view of their insurance that takes account of things like support (can you get you easily get ahold of your insurer), claims responsiveness, ease of use, technology and overall confidence in your provider.

It’s worth bearing in mind that not all policies are built the same, so just comparing price vs price doesn’t quite cover it. We highly recommend using our comparison tool if you want to see how we stack up when you also take the policies into consideration.  

An Unapologetic Philosophy

Our philosophy is blunt but honest: “We are not for everyone”.  Our model isn’t all things to all people, and that’s intentional. We’re looking for customers who align with our ethos – those who want a superior digital service.  

While we understand some may expect more traditional customer service methods, we respectfully suggest they may be happier elsewhere. This is not a dismissal, but a candid admission that our service model may not suit everyone’s expectations.

In sum up, initio is unyieldingly committed to delivering our unique brand of customer experience, one that is unabashedly shaped by the needs of modern, digital-savvy customers. While our approach may not resonate with everyone, we are firm in our refusal to compromise on the affordability and efficiency that our model provides.

To our customers who find value in what we offer, we welcome you wholeheartedly. To those who don’t, we don’t hesitate to say: “We are not for you” And that’s how we maintain the balance that allows us to continue delivering what we believe is the optimal blend of service and affordability in today’s market… all driven by our technology.

For any new tenancy agreement signed after 01 July 2021 your property will legally have to comply with all five Healthy Homes Standards within the first 90 days.

To keep on top of things here’s a reminder of what the changes mean, and what’s required.

The changes

Any new or renewed tenancy (whether it’s fixed term or periodic) in effect after 01 July 2021 has just 90 days to be fully compliant with Healthy Homes. For example, if new tenants move in on 01 July, you’ll have until 01 October to make the necessary changes.

Does your rental meet the five standards?

Heating Standard

At least one built-in heater capable of heating the main living room to 18°C or more.

• Some types of heaters that are unhealthy, too energy inefficient or unaffordable to run won’t meet the requirements.

Insulation Standard

Meet minimum requirements for insulation levels in ceilings and under-floors. Levels required depend on what part of the country the property is in (zone 1, 2 or 3).

• Insulation installed before 01 July 2016 acceptable under 2008 standards, and
• Insulation installed after 01 July 2016 acceptable under current, post 2016 thickness levels.

Learn more about the different levels for the three zones here.

Ventilation Standard

An extractor fan that vents to the outside (not another room), in all kitchens & bathrooms. They also need to meet some performance and size levels.

Open-able ventilation (like windows) to the outside in all liveable parts of the house. Size of windows is more than 5% compared to the size of the room they are in.

Drainage and Moisture Standard

Able to manage and drain normal rainfall levels. This includes working gutters, downpipes and drains for water flow.

• Houses with a closed off sub-floor (area beneath flooring) need a barricade to stop water flowing in, where feasible.

Draught Standard (air-type)

Air tight with no gaps that cause noticeable airflow into the house.

• Unused fireplaces are airtight, unless there’s an agreement with tenants otherwise.

What’s the penalty?

If you haven’t already, now is a great time to make a start. If you don’t comply and there’s tenants living in the property, you’re at risk of getting a penalty of up to $4,000 (per property). Anyone can claim a breach, including your tenants. If you haven’t already, the time’s now to make the changes to avoid future problems with your tenants.

Please Note: This is simply a summary of the five standards. To get the full details and piece of mind, we recommend going to the official Tenancy Services’ Guide.  

A closer look at property damage for New Zealand Landlords

Rental properties, for all their promise of steady income and long-term value can, if not managed correctly, become ground zero for an array of unforeseen problems and potential hazards. 

The reality is that damages, an often neglected aspect of rentals, pose a considerable risk to your investment. These risks are as varied as they are prevalent, raising a pertinent question in the minds of property owners: “What damage is most likely to occur at my rental property?” 

Safeguarding your investments and mitigating potential losses, and understanding these risks is essential to success as a landlord.  

A thorough examination of our 2022 loss data provides a detailed analysis of the challenges faced by New Zealand property owners.  Last year, claims related to rented properties — including traditional rental properties, own homes partially rented, and properties with multiple rentals, made up 35% of all the claims we received.  When focusing on these rental-specific claims, we identified a broad spectrum of loss types, which we’ve classified below in terms of number of claims:  

Water-related damage:  At 21.6%, this was the most common type of damage.  These losses typically involved scenarios including suddenly bursting pipes and rodent damage, while blocked pipes accounted for 6.4%.

Accidental damage: This category, representing 18.1% of the claims, includes an array of unexpected incidents, from minor mishaps to substantial accidents, illustrating the diverse risks property owners encounter.  The losses range from outdoor misadventures, such as balls shattering windows or trees falling onto the property (while being pruned), to indoor accidents like stains on carpets and damaged rugs, often due to spills or pet-related incidents.  There were also multiple kitchen bench damage incidents – caused by hot pots.  

Weather-related damage: Severe weather events substantially contributed to the claims we received, with flood-related incidents constituting 11.2% and wind-induced damage representing 9.9% of the total claims. These statistics do not include the severe flooding and storms experienced earlier this year.  Weather damage events are hard for property owners to  mitigate.   

Other incidents: Some more specific types of damages also occurred, albeit less frequently. These included

• Malicious damage by tenants (4.6%),
• Fire – accidental or unknown reasons (1.1%), 
• Meth contamination (1.5%), 
• Issues with keys and locks (3.5%), 
• Impact damage, typically involving a vehicle (5.5%) eg car versus house

Loss of rent: There were several circumstances that led to a loss of rental income, resulting in insurance claims. Property damage rendering the property uninhabitable was one such factor and is the most common.  

However, issues such as tenant abandonment, non-payment of rent, and eviction also significantly contributed. These loss-of-rent-only situations accounted for 3.3% of the total claims made.  

Frequency of claim vs. cost

The above numbers are based on frequency (i.e number of claims made).  We also analysed the payout values for rental property claims.  The graph below shows the top five losses by value.  This data is presented alongside the frequency of each of these claims.  It illustrates that losses like fire are uncommon but are high in value.  

Fire-related claims constituted a mere 1.1% of the overall number of rental property claims, but made up 25% of the total value of claims paid.  This underscores the potential devastation that fires can cause to rental properties. The significance of this cannot be overlooked, highlighting the importance of equipping your rental properties with smoke alarms, and fire extinguishers.  By taking these simple proactive measures, you can significantly reduce the risks associated with fires and safeguard your valuable assets and your tenants.

Final word 

Understanding the potential risks involved in rental property ownership can help landlords to better prepare for and protect their investments.  

Proactive and pragmatic management of landlord risk is a form of insurance in its own right.  In our experience, with the losses we see on a daily basis, a landlord that focuses on tenant selection, tenant vetting, regular property inspections, fire extinguishers in kitchens, regular maintenance including plumbing and electrical checks will outperform and not contribute to the statistics in this article.  

Choosing an insurance provider that knows landlord insurance and who provides an insurance policy that is dedicated to the diverse needs of rental property owners is the icing on the cake for a well-rounded risk mitigation approach to landlording.  

Learn more about initio’s Landlord insurance cover

The statistics presented in this article are based on a comprehensive analysis of claims data from initio for the calendar year of 2022, spanning our entire claims portfolio. Please note that all figures are approximate and have been calculated to provide a representative view of the claim trends during this period.