IFSO Case Study

Through a financial adviser, a couple held insurance on a rental property.

In June 2020, the couple discovered that their rental property had been damaged by methamphetamine contamination. They made a claim through their financial adviser to the insurer for the damage.

However, the insurer responded to the financial adviser, saying the policy required contamination levels above 15-µg, and asked for a detailed report on the contamination.

The report showed levels of 2-µg in the bathroom. After receiving the report, the insurer said the contamination claim fell outside the scope of cover provided by the policy, because the contamination levels were below the Gluckman report’s recommended level of 15-µg level threshold.

The insured disputed the decision. They said the Gluckman level was out of step with current law. The couple believed the house had to be decontaminated in line with Tenancy Services’ use of the standard of 1.5-µg. They had the house decontaminated and said the insurer’s delays in notifying them of the declined claim caused a further loss of rent.

The IFSO Scheme found the insurance contamination clause clearly sets out the cover only applied where the contamination levels were above 15-µg. But it appeared most insurers applied the lower standard.

This meant the insurer had to bring this different approach to owners’ attention. The IFSO Scheme found the financial adviser was informed of the contamination threshold and was asked to include a leaflet setting out the details of the changes to all customers.

As the financial adviser was the couple’s agent, the insurer had not failed to inform them about the different contamination threshold it used.

Complaint not upheld


Consumers need to know that there are two very different methamphetamine standards in New Zealand; the Ministry of Health standard of 1.5-µg, and the standard set out in a report prepared by the former Chief Science Adviser, Professor Sir Peter Gluckman, of 15-µg.



December 2021

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