The first Vaughan Cooper knew about a methamphetamine contamination problem in his rental property was when he found out the police had raided the house.
He had previously lived in it himself but moved out and placed it with a property manager to rent.
After the raid, tests showed contamination from methamphetamine throughout the house. They indicated that while the drug had probably not been made there, the people staying in the house were heavy users.
The clean-up job was extensive – the interiors had to be resurfaced, right down to the light switches. It was also expensive, through repairs and lost rent, although Cooper’s insurer, NZI, footed the bulk of the bill.
IAG, which operates insurance brands including NZI, State and AMI, says the number of claims it gets for methamphetamine contamination has increased from about 10 a month from 2013 through 2015, to close to 50 a month last year.
“It spans and impacts a lot of people,” said IAG corporate affairs manager Craig Dowling. He said the cost of claims received was about $14 million a year.
But there were problems with inconsistent wordings across insurance policies, he said. In many cases, there was no cover if the contamination happened through use, rather than manufacture.
Disputes resolution schemes have received a number of complaints about meth claims being declined.
In one case dealt with by the Insurance and Financial Services Ombudsman (IFSO) this year, a landlord had claimed for the cost of decontaminating a house.
The insurer declined it because he had not proven the damage occurred during the period of the insurance, or that it was sudden. His complaint was rejected by IFSO because he did not have evidence.
IAG has made changes to its policies, which Dowling said should improve clarity. It now offers cover for contamination from use and manufacture, in both rental properties and owner-occupied homes, except where family members are involved.
It still will not offer cover for houses that are offered on websites such as Airbnb.
Insurance policies will now cover up to $30,000 of meth-related damage, with an excess $2500, up from $400. Landlords’ premiums will increase by between $40 and $130 a year, because they are involved in the majority of meth claims.
IAG said decontamination could cost between $2000 and $50,000.
Landlords have obligations to conduct regular inspections for cover to be valid and take reasonable care in letting the property. Contents are not covered.
Dowling said more work was needed to provide a clearer understanding of the methamphetamine problem.
“An unregulated industry has developed around testing for contamination and subsequent cleaning of properties and that has contributed in some situations to misinformation about risks. We are in the process of establishing a list of preferred partners who can provide our customers and ourselves confidence in the work they do,” Dowling said.
Work is under way to develop a standard for the industry. It will focus on the procedures used for sampling, testing and remediation of contaminated properties.
Ministry of Health guidelines do not confirm what is a safe level of methamphetamine contamination but establish an acceptable level of 0.5mcg per 100 sq cm.
Some testing companies argue that as little as 0.2mcg or 0.3mcg per 100 sq cm is unsafe. But scientists have argued that houses are still safe at many times the Ministry guidelines. Dowling said the uncertainty was hard for consumers to deal with.
“Insurers are looking for the standard to provide consistency in application to enable an efficient claims process for the insured. We also support the separation of meth clean-up services from the meth testers so that there is no conflict of interest,” Insurance Council chief executive Tim Grafton said.
Cooper said his experience would not put him off renting properties to other people. “But it makes you take more precautions and double check you have insurance right.”
Article courtesy of Stuff.co.nz
