Do landlords have to inspect rentals for insurance to pay out?

Some insurance policies require 3 or 6-monthly inspections.
Some insurance policies require three or six-monthly inspections. Photo credit: Getty.

Doing rental inspections allows landlords to keep their properties up-to-scratch after a tenant moves in.  

While renters' opinions may differ on how often their landlords should pay a visit, is there a line in the sand for insurance policies?

According to an AA Insurance (AAI) Lifestyle Survey for October 2019, 42 percent of tenants said that their landlord inspects the rental property every three months or less.  A further 5 percent said checks were done every four-to-five months. 

Just 15 percent of tenants said their landlords check the property every six months and the remaining 38 percent said checks were done less or never.

While standard house and contents insurance policies, such as under AA Insurance and Vero don't specify rental checks as a requirement for cover, optional landlord-specific covers for things such as loss of rent and malicious, intentional or deliberate damage, do.

Landlord-specific insurance may require three or six-monthly inspections

Aaron Dickinson, head of product at AAI said that although the company's standard contents insurance policies don't require rental inspections, that's not the case for landlord-specific covers, such as 'Extended landlord cover'.

"Landlords who have [chosen] this benefit are required to comply with additional policy conditions, including completing inspections every six months.

"By [doing this], the landlord is safeguarding their property and ensuring their tenants are also looking after the property as expected," Dickinson said.

To comply with AAI's landlord policy, landlords are required to get references from prospective tenants, collect at least a week's rent and two weeks' bond in advance, contact tenants in writing if rent falls seven days or more behind (further contact is required at 14 days) and complete a six-monthly rental inspection with a written record.

Similarly, Vero's LandlordPlan policy wording specifies that properties must be inspected internally and externally at six-monthly intervals, or sooner if there's a change of tenant.

Tim Grafton, chief executive of the Insurance Council of NZ said that some insurers require routine three or six-monthly inspections and emphasised that landlords with specific rental covers should check their policy wording.

"It's important that landlords read their policy carefully to ensure they've selected a product suitable to [their] needs and are fully aware of their obligations as a landlord.

"Some policies have limits for things such as meth contamination and what level of contamination will trigger a claim.  Also, they should ensure they understand how their policy defines a 'tenant'," Grafton said.

Jennifer Sykes, Tenancy Services at the Ministry of Business, Innovation and Employment said that landlords should give at least 48 hours' notice of the inspection and take a record of it.

"Landlords should take a digital camera, the [initial] property inspection report for reference and take photos where appropriate, taking care not to include the tenant's belongings.

While inspections can't be more frequent than once every four weeks and must be done between 8am and 7pm, tenants are required to be reasonable in agreeing to them.  

Recent AAI survey results indicate that rental checks every six months or less are the most common.  Landlord-specific insurance policies require six-monthly inspections (some may require three-monthly) before they'll pay out, backed by a written record.

Rental inspections are necessary for maintenance, safety and insurance reasons.  Tenants wanting to live in a well-maintained property may welcome the intrusion, while landlords have the satisfaction that their nest egg is taken care of.