A landlord whose home was damaged by tenants who produced drugs at the property has lost his appeal to have his insurer’s decision to deny the claim overturned.

The complainant lodged a claim with IAG to cover repairs of up to $50,600 in costs for damage caused by tenants who resided at the property between June to August last year. The claimant said the inhabitants were growing and producing drugs and “trashed the house”.

IAG denied the claim, saying that the home and contents policy held exclusions for “deliberate or intentional” acts by tenants that caused property destruction.

The policy also limited cover for “malicious damage”, which it defined as “a wrongful act by a person with the intention of damaging property”.

The Australian Financial Complaints Authority (AFCA) considered that the policy did cover accidental damage but noted that it did not apply to the destruction caused by tenants or the circumstances of the claim.

“I do not consider, in any case, that the evidence establishes the damage was accidental,” AFCA said.

AFCA shot down appeals from the homeowner that the event should be treated as a “crime” and covered by the policy.

“The policy does not include ‘crime’ as a separate insured event. In the particular circumstances, I am satisfied in any case that the actions of the tenant in modifying and using the property as they did, amounts to ‘malicious damage’,” it said.

The decision also dismissed arguments from the complainant that the vandalism may have been caused by people who were not the tenants, saying there was no evidence to back the claim.

It said IAG was entitled to decline cover, saying “it would not be fair to require the insurer to cover a claim which has not been shown to fall within the scope of cover under the policy”.

Click here for the ruling.