Meth contaminated properties and insurance – what is the future?
The difference between contamination from use of meth and contamination from meth manufacture is technically difficult to determine although generally the level of contamination from manufacture tends to be higher. Both affect insurance claims.
One thing is for certain, the period between no meth and a meth lab can be overnight!
Today, home owners who are faced with a meth contaminated home clean up are looking at a maximum cover of $30,000 from their insurer and in some insurance policies, no cover at all.
In a recent Stuff article, the insurance ombudsman is reportedly receiving increased complaints as some home owners find their insurance policy does not cover meth contamination clean ups.
These two claims appear to have been declined by the insurer and the decision upheld by the insurance ombudsman:
- Claim declined as the level of meth contamination was under the NZ Standard therefore the insurer deemed there was no ‘damage’
- MethSolutions view: all meth contamination causes damage which impacts value due to reaction of prospective purchasers and lenders and the ability to attract good tenants and achieve above market rent
- Claim declined as meth contamination was deemed by the insurer to be ‘gradual’ and no evidence it occurred during the period of cover
- MethSolutions view: this approach is based on balance of probabilities however contamination could have been caused in one event
Contamination can happen fast
Back in June 2014, we completed an initial screening assessment for methamphetamine contamination in a home in South East Auckland. Lab analysis detected 4,300 micrograms of methamphetamine with significant levels of precursor chemicals used in the manufacturing process.
The 8-year-old rental property, managed professionally, was a clandestine meth lab located in a family-orientated new subdivision. The property could not be effectively decontaminated and was subsequently demolished.
Contractors removed 500mm of contaminated top soil. For every kilogram of methamphetamine produced, there is approximately 4-6 kilograms of toxic waste that must be dumped somewhere.
Fortunately, the owner of this property received a full pay-out based on the market value of the home.
Unfortunately, that window of opportunity has closed with increased insurance premiums, increased landlord obligations with decreased insurance cover for meth contamination.
So, how can home owners mitigate MethRisk?
MethSolutions are industry leaders in MethManagement and we offer New Zealand’s only proactive strategy to mitigate both meth use and meth manufacture.
- During the tenancy and;
- In between tenants
- All our samples are analysed at Hill Laboratory
- Deters meth related activity
Monitor for meth manufacturing chemicals
- 24/7 detection of precursor chemicals with MethMinder
- Multiple anti-tamper sensors
- Deters meth related activity
The cost to mitigate methamphetamine contamination is low in comparison with the tens of thousands of dollars to test, decontaminate, re-test and refurbish a property!
When the time comes to market the property and realise the capital gain, MethManaged properties are more desirable to a wider range of purchasers increasing potential for achieving a better return on investment.
Manage the MethRisk or the risk will manage you!
Contact MethSolutions for more information about proactive MethManagement 0800 638 4522