A landlord has lost a bid to have methamphetamine damage in her property covered after the complaints authority found her policy did not respond to contamination from recreational drug use.

The claimant said her property had to be decontaminated and repaired after her tenant’s ex-partner smoked the drug during visits.

An occupational hygienist had found the property was uninhabitable, with several rooms showing elevated methamphetamine levels.

Insurer Blue Zebra declined the claim because its policy mostly excluded contamination or pollution. An exception to the exclusion was the “manufacturing, storage or distribution of a controlled drug”.

The landlord argued “storage” included the “physical retention of a controlled substance within [the] property, regardless of the quantity”.

But in a dispute ruling, the Australian Financial Complaints Authority says using the word “storage” alongside the terms “manufacturing” and “distribution” implies a response to commercial activity involving drug production, preparation or supply.

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The ombudsman says there was “no persuasive evidence of manufacturing or distribution of the methamphetamine at the insured property. While the property appeared to be cluttered, there is no evidence of drug manufacturing such as property modifications, visible damage (including burns marks or stains), chemical waste, a laboratory or bulk storage facilities.

“Had drug manufacturing occurred on-site, significantly higher concentration levels would ordinarily be expected.

“This is consistent with [the hygienist’s] conclusion, and the test results obtained at the property.”

The authority says the damage clearly stemmed from long-term drug consumption.

“The existence of contamination is not in dispute; rather, the issue is whether the contamination arose from an insured cause. The policy wording is unambiguous and clearly outlines the scope of cover. In these circumstances, the insurer is entitled to rely on the terms of the policy.”

See the ruling here.

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