Renters blissfully unaware of their risks
The only thing a frying pan full of sizzling bacon usually signifies is a delicious breakfast lies ahead.
For former Dunedin student Glenn Shields, it ended with an empty belly, a courtroom battle, and a $150,000 debt.
His unattended pan burnt the house down as he popped next door for a tomato, and his landlord's insurer dragged him over the coals to recover the loss.
More shockingly, Shields' five fellow flatmates were all collectively held liable by the courts, despite the fact they were nowhere near the house at the time.
We are now 15 years down the track, and countless bacon breakfasts later.
But Insurance Council chief executive Tim Grafton says many renters are still blissfully unaware of the risks they are facing.
They don't understand that when they sign their name on the tenancy agreement, they are usually held jointly liable for any damage, he says.
If you have got a flatmate who dries their towels on the heater, or has a penchant for dribbly candles, it's pause for thought.
But it does not even make any difference if it was a flatmate, friend, rowdy party-goer, or a visiting tradie - so long as they are lawfully at the house.
Here's a story with a happier ending. An Auckland trio of students recently racked up a damages bill of almost $27,000 after one of them accidentally flooded their apartment building.
They were spared the crippling cost because one of the students had insurance for up to $1 million of legal liability.
Most people don't know that this is a common bonus feature of most forms of contents insurance, also sometimes advertised as renter's insurance.
This particular student's foresight was far sharper than many of her peers.
A recent survey by Massey University found that while most youth understood the value of getting cover, 80 per cent had no form of contents insurance.
Why are so many leaving themselves open to the loss of not only their own possessions, but potentially getting the blame for someone else's mistake?
Besides ignorance and the "it won't happen to me" attitude, Grafton says there are also financial factors at play.
"Obviously for students on low income, costs is a consideration," he says.
"Having said that, if you weigh up the liabilities you could face and look at the costs you face, it is not that expensive."
Claire Matthews, Massey University's director of financial planning, was involved in the survey.
She agrees most renters will not even be aware of their own liability, let alone the fact that contents insurance usually offers extra protection.
"When you think about contents insurance, you automatically think about covering your own contents," she says.
Most are motivated by protecting their own stuff, or would be, if they had anything of value.
"If you think about a young person, getting started, they are not likely to have a huge amount of assets."
Paying upwards of $500 each year to protect a flat mostly filled with broken furniture, pizza boxes and empty stubbies probably does not seem worth the money.
While a few thousand dollars worth of stolen or damaged possessions is an annoyance, a million dollars worth of accidental damage is potentially life-changing.
It is the same concept as car insurance, Even if you drive a worthless rust bucket, you still get third party cover on the off-chance that you prang someone's late model beemer.
Ironically, those who recognise the risk and want to protect themselves frequently find out they are almost uninsurable anyway.
Recently this reporter tried to get insurance from his own bank. Several long phone calls to the underwriter were followed by a flat rejection.
Why? It does not matter how closely you have bonded with your flatties, in every insurer's mind, if they are not family, they are potential thieves.
It is also about the company they keep.
"Typically you will have friends of friends coming through, people you may not know," says Grafton.
"It is a different situation to your own home, where you actually know who you are admitting to your home."
While not applicable to all renters, people also tend to better care of their own property than of someone else's, he says.
BusinessDay called 11 major insurers with a scenario involving a person living with five flatmates.
Almost every time we faced exhaustive questioning into the exact nature of the relationships, often only to be declined at the end of the process.
Newcomer Youi got things off to a bad start when a call centre staffer said they had never heard of renter's insurance.
Eventually they said there were too many people living in the house to provide cover, a viewpoint shared by AMI.
BNZ, Kiwibank, Tower and Fintel all refused to play ball unless the bedroom had a lock on it, and was kept locked whenever the occupant was out of the house. Highly impractical and tricky to explain to the housemates.
Several of the insurers said four people would have been OK, but not six. One bank staff member compared it to a boarding house environment.
Are insurers' fears about dodgy flatties actually justified? If they 'are including actual boarding houses, the answer is probably yes.
An inquiry into boarding houses in New Zealand, as reported by the Social Services Committee, found "traditional" dwellers were often single males over 45, who often suffered from drug addiction or emotional issues.
They were also highly transient, with the average length of tenancy just 10 months.
The reluctance of some insurers to provide cover comes back to the question of risk, says Grafton.
"It is available, but it is higher-risk territory for the insurer."
The obvious solution is to not admit defeat if you are rejected by one, two, or even three insurers. ASB and AA Insurance offered cover without any obvious strings attached, so could be a good starting point.
ANZ and State limited it to the most basic cover, and Westpac said there would have to be an obvious forced entry to make a claim.
The survey revealed it was also well worth shopping around, with State's bare-bones $250 excess and $261 premium dramatically different to AA Insurance's $400 excess and $707 premium.
Even though most insurers are not exactly welcoming renters with open arms, Grafton says the bottom line is that it is obtainable.
He says there is still a lot of work to be done to bring the public up to speed on the risks they may not be aware of.
Insurance and Savings Ombudsman Karen Stevens, who handles complaints from customers who think they have been wronged, is also hot on the topic.
Insurance is probably the last thing on most students' minds when they are settling into a new flat, she says.
"But doing something now could save a lot of stress later."