Liability anomaly
Question from Gavin updated on 1st April 2016:
My question is a case of who is liable for damage.
I am a tenant and I have legal liability insurance with AMI. My landlord has home insurance with NZI.
I (the tenant) was drunk at a party and did a kind of jump and sit (careless action) on to the bench edge near the oven. The glass cook top cracked and it has to be replaced. I phoned AMI and they said my landlord needs to make a claim first and make me liable. My landlord makes a claim with NZI (the excess is $650), but NZI say they won't make me legally liable.
I've read the RTA and section 40 part 4 and 2a should apply - and I've read that PLA Section 268-269 may be giving legal immunity to me (the tenant).
So my questions are:
Why am I not legally liable?
Why won't the insurance company make me liable?
What piece of legislation says I'm not?
Our expert Myles Noble responded:
Thank you for your question and good on you for your honesty with your landlord.
The perceived anomaly here is due to the recent precedent under "Holler vs Osaki" and the implications this has had on the Residential Tenancies Act whereby you would need to have intentionally damaged your landlords property to be liable. This decision is currently under appeal and it is widely believed that the Court of Appeal will reverse the decision - indeed many Insurers are holding off recovery action against tenants until this appeal is heard. Up until that decision, a tenant would have been liable for damage to the Landlord’s property caused by the negligence of tenant.
The other aspect to mention is that where a tenant and a landlord are both insured there is an agreement between most major Insurers called the "Standstill Agreement" whereby losses lie where they fall. Additionally, in your case, both AMI and NZI are owned by the same parent company, IAG, so recovery against AMI by NZI may be redundant.
Myles Noble is head of claims and earthquake response for Crombie Lockwood. He also holds various advisory board positions in the insurance industry.Search the Ask an Expert archive
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