It is late one evening and you receive a call from the Fire Service. They advise that one of your rental properties has been seriously damaged by a fire caused by a tenant leaving something cooking on the stove. Your first concern is for the health and safety of your tenants and the caller assures you that the family is unharmed. Your second thought is the level of damage to the property. You check your insurance policy and find that you are fully covered for such events and you are up to date with payment of your premiums. You are relieved that the damage will be covered and aside from payment of the excess as you have a good insurance policy so you should not be out of pocket.
This is presumably more or less how the landlord would have reacted in the recent case heard in the Court of Appeal, Holler & Rouse v Osaki & Anor [2016] NZCA 130 [15 April 2016]. The facts of that case are similar to our scenario: Mr Holler and Ms Rouse (“the Landlords”) owned a house rented
to Mr Osaki and Mr Osaki’s family including his wife lived in the house (“the Tenants”). The house was insured by AMI Insurance Limited (“AMI”). In
2009, Mrs Osaki left a pot of oil on high heat unattended for a few minutes. A fire broke out and caused extensive damage to the house.
The Landlords claimed under their policy with AMI and they were covered for the cost of repairs amounting to $216,413.28. AMI exercised their right of
subrogation in the insurance policy. Subrogation is the legal term for the process when an insurer pursues the tenants as the party that the insurer
claimed...
