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A property investor who had part of his insurance claim declined because he did not tell his insurer he was letting it via Airbnb is representative of a wider problem, landlord representatives say.
The man took his complaint to ombudsman scheme Financial Services Complaints after he had his claim for loss of income from a property after weather damage turned down.
The property had initially been tenanted but in 2018 he listed it on Airbnb.
The man said he told his broker but his cover was not updated. The broker had no record of this happening.
The insurer said he was covered for the damage but not the loss of income.
FSCL said even if he had been able to prove the call happened, it would not have awarded compensation.
"We noted that the insurer's assessor calculated the loss of income at only $1860. We would have then taken into account that [he] had contributed to his loss (by at least half) because he had not seen and queried that the occupancy of the property on his schedule was noted as 'tenanted'.
"We would have also taken into account that [he] would have had to pay additional premium for six years to have the property insured as an Airbnb. These two factors combined would likely offset all the possible $1860 compensation for lost income."
Auckland Property Investors Association general manager Sarina Gibbon said it was not uncommon for investors not to realise they needed to tell their insurer if they listed a property on Airbnb or let it via a social housing provider.
People needed to realise that any change of use could be a notifiable event, she said. If they did not tell their insurer, they could end up wasting money on a policy that would not pay out.
"More often than not, people will not be mindful and consider that insurance piece. It's a bigger problem than we would like to think."