A Piopio family who lost all their belongings in a May house fire have been slapped with a $200,000 insurance bill.
Toni Mita, 20, and Ngatoa Ngauru, 24, were not insured at the time of the fire as they were in the middle of changing insurance companies after moving into the rental three weeks earlier.
Ms Mita said they were still reeling from the fire, but their lives turned into a nightmare last week when they received a letter from her landlord's insurance company, AMI, stating it held them responsible and wanted them to pay for the gutted house.
"My partner is worse than me at the moment," Miss Mita said yesterday.
"He can't sleep at all. He's spewing, he's crying. I think he's going to have a nervous breakdown very shortly."
The Insurance Council of New Zealand said insurance companies were entitled to recover their costs – but were also able to use their discretion.
Ms Mita said the company had told her they were responsible for paying the $200,000 replacement cost of the house.
"I asked them the reason why and they said `because you had your two children in the house they're held responsible for the fire'."
The fire, which was ruled accidental by fire investigators, began after a clothes airer collapsed on to a pot belly fire.
Ms Mita said her children were in bed at the time and could not have been responsible for what she considered an accident.
"Things like this happen, accidents happen and we feel blamed now. We feel responsible like they're making us feel like we went and poured petrol on their house and set it on fire or something."
Miss Mita was to visit Hamilton today to seek legal advice but in repsonse to Times inquiries AMI Christchurch-based manager products John McSweeney this morning said its Te Awamutu branch had "jumped the gun on this one" and would review its stance about suing for damages.
"Now that myself and head office is aware of what's happened and where everything is ... we have put on the brakes."
However, he stopped short of cancelling action all together.
Insurance council spokesman Terry Jordan said there was only one thing for tenants to learn from this scenario – get contents insurance.
"I think the message is tenants need to be responsbile for their actions and need to get contents insurance ... everyone who's flatting and renting should have it."
AMI was perfectly entitled to recoup its costs from the party deemed at fault through what is known as "subregation".
However, AMI could use its discretion and companies were usually open to negotiation.
"It's sort of a case-by-case basis really. Insurers look at the circumstances of each case, especially people renting.
"If they don't have contents insurance then they're not covered for damage they cause. But people renting don't generally have the deposit for a house."
A worst-case scenario was for tenants to file for bankruptcy.
"But I'm not sure if that's really in anyone's interests.
"AMI are perfectly entitled to take the action they're taking ... it's probably an opening shot from AMI on the issue.
"AMI will be looking to recover the whole lot or looking at their personal circumstances to see what they can recover. But obviously you don't demand $200,000 from someone lightly."