Since the meth plague reared its ugly head a few years ago, insurers like NZI and Vero have been paying out significant costs to rectify meth damage in contaminated commercial and residential properties. In some cases repair bills for individual properties have been in the hundreds of thousands. Clearly insurers couldn’t continue to pay these sorts of costs indefinitely and are now making changes to the cover provided.
The problem for insurers has been compounded with recent increased publicity and awareness of the meth problem. Insurance companies such as NZI found that “huge numbers of claims” for meth contamination were coming through after people got testing completed. Unfortunately these tests often couldn’t determine when the meth damage to the property occurred and in some cases where tenants had come and gone and who the culprits were.
How do we define ‘manufacturing’?
The biggest issue was of course the meth labs, where meth was ‘manufactured.’ This activity results in surfaces, wood, wallpaper, carpet, furniture and the floor soaked in toxins which humans absorb and inhale. However meth “use” seldom leaves enough residue to harm future occupants. The problem for insurers has been that there is currently no recognised meth contamination standard for insurers in NZ. The Ministry of Health’s 2010 Guidelines for the Remediation of Clandestine Methamphetamine Laboratory Sites were only designed for properties where meth had been “manufactured”, but in the absence of an alternative, they’ve been used for all meth claims including meth “use”.
Insurance companies such as NZI have now adopted the Ministry of Health’s recommendation regarding meth contamination standards for “use” and “manufacture”. This was released late last year, and will be used until Standards NZ release their formal contamination standards later this year.
So how does this affect me? Firstly insurers like NZI will want landlords to have regular testing done to establish when contamination has occurred. In plain English: insurers may want regular tests to chronicle the history of the place so it’s possible to prove if and when contamination occurred. Secondly they have reduced the open ended amount payable on repairs. This sub-limit should still easily cover the majority of repair costs. Finally minimal meth “use” below the new guidelines will not be considered as a claim.
I’m here to help and I will endeavour to keep you updated on any changes being made to insurers policies around meth contamination. I do have an IAG Guide to Methamphetamine Contamination booklet which you can read online here.
NZI’s new meth contamination standards can be read via this link.
The preferred/endorsed meth testing suppliers NZI insurance claimants must use are listed here.
And please enjoy this highly relevant article about how and why NZI is receiving five times the number of meth claims it did a couple of years ago.