Insurers crack down on claims

AUCKLAND: Homeowners are facing a crackdown over methamphetaminerelated insurance claims as insurers raise premiums and excess levels and cap how much people can claim.

IAG, which owns brands NZI, AMI and State Insurance, has told its customers they will have to pay a higher excess for methrelated claims and they will not be able to claim for contamination of contents.

All its homeowner policies — not just those for rental property owners — will be affected by the change, which will raise the standard excess from $400 to $2500 for meth claims.

‘‘This is to ensure homeowners are incentivised to make efforts to minimise losses by doing what they can to protect their homes,’’ IAG said.

On top of the excess increase, rental home owners will also face an increase in their annual premiums of between $40 and $130.

‘‘As the majority of contamination claims to date involve rental properties, and claim numbers and overall claims costs involving methamphetamine contamination have increased in recent years, premiums across landlord policies will see some increases directly related to the cost of these claims and the changes to levels of cover.’’

The insurer has also said it will not accept claims for contents contamination.

‘‘Claims will not be accepted for contamination to contents in homes, as it is too difficult to determine the timing and nature of any event causing contamination.’’

IAG said it had received an average of 60 methrelated claims a month for the past year. The claims had cost the company $14 million in the past year.

IAG said that in future claim acceptance would be based on the presence of contamination, not reliant on the cause, and claims would be capped at $30,000, up from $25,000. It said the average home decontamination cost somewhere between $20,000 and $25,000 although it could be as high as $50,000.

IAG is not the only insurer to have made methrelated changes.

Vero said it began to introduce a cap of $30,000 for claims from last August.

Before that there was no limit other than the amount insured for.

A Vero spokesman said the cap was introduced to keep premiums affordable after the industry as a whole had experienced a rapid increase in the number of claims related to meth damage.

Vero’s claims had more than doubled in the past two years.

‘‘In order to keep our premiums affordable for our customers, we’ve introduced steps to limit our cover to a maximum of $30,000 for residential landlords, and excluded cover from our Flexi cover option.’’

The spokesman said Vero had no plans to increase the excess specifically for meth claims.

It would only consider paying out a methrelated claim for an owneroccupier if an unknown person broke into the house and used or manufactured meth, he said.

While increases had been made to Vero premiums, these were, on average, under $100, he said.

AA Insurance head of claims Simon Hobbs said landlords could opt to tack on extra cover to their insurance policies that would include the risk of illegal drug use.

That had a claim cap of $30,000 which was introduced in September 2015.

Mr Hobbs said AA had not seen any significant increase in claim numbers but was seeing between two and six methrated claims a month with an average claim amount of $15,000 to $16,000.

A spokesman for Tower Insurance said: ‘‘Over the past 18 months we have been progressively updating our policies to bring them in line with industry standards.

‘‘Customers who insure their rental properties with us can be covered for up to $30,000 for the cost of repairing or rebuilding physical damage as a result of contamination by illegal substances.’’

New Zealand Property Investors Federation chief executive Andrew King said the dearer insurance would ‘‘undoubtedly’’ be passed on renters. — NZME

❛ This is to ensure homeowners are incentivised to make efforts to minimise losses by doing what they can to protect their homes ❜