Insuring damage

Question from Ash updated on 4th November 2019:

Regarding the new law where landlords have to provide insurance information to a new tenant so that the tenant will know their liability (which is bond money or the landlord’s insurance excess, whichever is lower). It means that tenants can get away with trashing a property only to pay the excess amount of landlord’s insurance which would always be lower than bond money.

Are there any other tactics which would bind tenants for what they are actually liable for? For example, would increasing the excess to of insurance to more than $2,000 give some relief to a landlord?



Our expert Rene Swindley responded:

Intentional damage is not just limited to the amount of the landlord’s excess. If a tenant “trashes” a property and it was intentional, the tenant can be held responsible for the total cost of the damage.
Contrast this with a tenant leaving a house in a poor state caused by careless damage – due to pets for example. In this case, the tenant is liable per careless damage “event” to the extent of the landlord’s excess or four weeks rent (whichever is lesser). So the tenant has responsibility for careless damage on a per event basis, not a per tenancy basis.

Regular property inspections and communication with tenants helps to identify such “events”. If you leave it to the end of the tenancy to hold the tenant responsible then you might come up short.
Trying to get more relief by increasing your rental property insurance excess may backfire as the excess for accidental damage, such as a burst water pipe, is your responsibility. So you’ll end up paying the higher excess too.

To further complicate this, the legislation’s approach to “careless damage” is ambiguous. It’s not a given that all tenant-related damage is the responsibility of the tenant. For example, if a tenant accidentally spills wine on the carpet is that careless or accidental? Government guidance or a Tenancy Tribunal decision is needed to provide us with much-needed clarity in this area.




Rene is the founder of digital insurance platform Initio, which is about insuring houses online in real time to provide a faster, smoother and customer-first approach to property insurance.

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