Landlord Insurance in NZ — What Most Landlords Get Wrong (And How to Avoid Declined Claims)

If you own a rental property in New Zealand, there’s one belief that could cost you thousands:

“My insurance will take care of it.”

I wish it were that simple.

But the truth is:

If you get even one part of the tenancy process wrong, your insurer can decline your entire claim — even if the damage is real, the rent is lost, and the tenant caused it.

Most landlords never realise they’re exposed until a claim is declined.

Today, I’ll break down what landlord insurance actually covers, the traps that catch DIY landlords out, and how to protect yourself from declined claims, multiple excesses, and expensive vacancy periods.

1. What Landlord Insurance Actually Covers

Most NZ landlord policies cover four key areas:

• Tenant Damage — accidental, intentional, or malicious

• Loss of Rent — arrears, abandonment, or repairs after damage

• Liability — if someone is injured or sues you

• Extras — meth, burglary, water damage, depending on policy

But here’s the important part:

Insurance only works when your tenancy file is complete and compliant.

If inspections, notices, arrears management, or documentation are missing, insurers can — and often do — decline claims.

2. Insurers Expect You to Behave Like a Professional Landlord

This doesn’t mean being corporate — it means being proven.

You must be able to show:

• Entry, routine, and exit inspections (with date-stamped photos)

• Healthy Homes evidence

• Smoke alarm installation + testing records

• Correctly served notices

• Arrears action within 7 days

• Full rent ledger

• Maintenance logs

• Clear email communication

• All actions aligned with the RTA

If even one of these items is missing, you’re exposed.

3. The Loss-of-Rent Trap (And Why Excesses Matter More Than Landlords Realise)

Loss of rent is one of the most stressful issues for landlords because your mortgage and expenses don’t stop when rent does.

The biggest problem?

Your excess can wipe out your entire claim.

Many landlords choose high excesses to keep premiums lower — $1,000, $1,500, even $2,500.

But here’s what that actually means.

Example:

Rent: $650/week

Excess: $2,000

Bond is applied…

Excess is applied…

And often, there’s nothing left to claim.

And there’s another hidden trap most landlords don’t think about:

If your insurance claim is approved, the tenant is liable for the excess.

Good luck collecting it.

Think about the typical situation:

• The tenant can’t pay rent

• They’re not answering your calls

• They might be abandoning the property

• They don’t have savings

• They’re not in any position to pay $1,000–$2,500

So yes — legally, they owe it.

But practically?

You will never see that money.

Which means:

A high excess becomes your cost — every time.

That’s why, in the real world, the most practical excess in NZ is:

About one week’s rent.

Premiums stay reasonable, and claims are worth making.

4. Bond Treatment — Not All Insurers Are Created Equal

This is where many landlords get a nasty surprise.

There are two types of insurers:

Type 1 — Bond-offset insurers

These insurers deduct the bond from your insurance payout.

Here’s what actually happens:

1. You use the bond normally to cover arrears or damage

2. THEN the insurer subtracts the same bond amount from your payout

3. THEN they apply your excess

This “double-counting” of the bond means your payout is significantly reduced — or wiped out entirely.

Type 2 — Bond-friendly insurers

These insurers do NOT deduct the bond from your payout.

This means:

• You can use the bond to tidy the home quickly

• You re-rent the property faster

• Insurance covers the actual loss, not the bond

• Claims become far more worthwhile

This one difference can save landlords thousands.

5. Multiple Damage Events = Multiple Excesses

Insurance excess is charged per event — not per claim.

If you find:

• A hole punched in one room

• Another hole punched in another room

Even discovered at the same inspection, insurers may treat them as two separate events — meaning two excesses.

But here’s the good news:

One insurer treats all tenant damage as one single event

…but only when your documentation is flawless:

• Entry inspection perfect

• Routine inspections on time

• Photos clear & consistent

• Damage discovered at the same visit

• Tenancy file complete & compliant

Good documentation = one excess instead of two.

6. The #1 Killer of Insurance Claims: Missed Inspections

A missed inspection exposes you to declines on:

• Loss of rent

• Tenant damage

• Meth contamination

• Liability claims

The biggest exposure?

Gradual damage.

It is almost never covered.

• Slow leaks

• Moisture issues

• Rot

• Mould behind curtains

• Shower/bath deterioration

Insurers frequently argue:

“You should have discovered this earlier.”

Without routine inspections, you have no defence.

7. Poor Documentation = “Claim Declined”

Insurers expect your file to be complete.

If it’s not documented, insurers treat it as though it didn’t happen.

They expect:

• Entry, routine, and exit inspections

• Healthy Homes evidence

• Smoke alarm checks

• Rent ledger accuracy

• Notice timelines

• Email trails

• Arrears action within 7 days

• Maintenance records

Your documentation must be strong enough for insurers to justify paying your claim internally.

8. Why a Property Manager Saves You Money

DIY feels cheaper — until something goes wrong.

A great property manager protects:

• Your rent

• Your insurance position

• Your compliance

• Your documentation

• Your Tribunal readiness

• Your time and stress

And the cost?

About the price of a daily flat white — but instead of caffeine, you get peace of mind.

Final Thoughts — Insurance Only Works If Your File Is Flawless

Insurance isn’t a safety net — it’s a contract.

Your ability to prove everything determines whether your insurer pays.

At Good Neighbours, we:

• Follow the RTA to the letter

• Document everything

• Keep your file insurance-ready

• Protect landlords from declined claims

Download the Free Guide:

Download Your Free Guide

“The 7 Insurance Mistakes NZ Landlords Make”

Your blueprint to avoiding declined claims, extra excesses, and unexpected costs.

This guide helps you review your tenancy file and fix gaps before they become expensive problems.