A group representing tenants is now trying to clarify exactly what its members are, or aren't, responsible for when renting a house.

A Court of Appeal ruling has made it clear tenants aren't necessarily liable for damage they accidentally cause.

Property Investors Federation CEO Andrew King said it's a crazy decision.

"If they say that if it's accidental damage then the tenant can no longer be held responsible. What is accidental damage and what's malicious damage? It's going to get extremely confusing".

The Court of Appeal has ruled two tenants can't be held accountable for the costs of a fire that started when one of them left a pot of boiling oil unattended on a stove.

Instead, the landlord's insurer AMI must pay the $216,000 repair bill.

Mr King told Mike Hosking he hopes the Insurance Council appeals the decision.

"By taking away the responsibility from the tenants and passing it on to the landlords, it seems crazy."

A landlord who wants to be identified only as Peter told Leighton Smith he is shocked at the decision.

"Some of the people have already said, before they know the full facts, that they're just going to leave their places vacant, their going to kick their tenants out and say nah."

Braziers Property Director Tony Brazier said it's going to make getting insurance almost impossible.

"And insurance is almost enough to put some landlords off as it is after the earthquake. But now we have the insurance here to cover idiotic actions which are considered to be okay."

The Homeowners Association said tenants are only liable for damages to a property they rent - if they're found to be negligent.

President John Gray said when landlords insure their property, subjugation rights in that contract allow the insurance company to go after the tenants, should they feel negligence was the cause.

"In those policies that are provided to landlord owners, insurance companies can seek to recover their loss by going after those who are responsible but now that opportunity has been severed by this decision."

Mr Gray finds it disconcerting and expects landlords' insurance premiums will go up, and so too will rents.

"It is a bit disconcerting for landlord owners because it will inevitably lead to small increases in premiums, we're certain of that, in the long term, but it will be put in context with the number of cases to occur."

Auckland Tenants Protection Association chairman Peter Klein said they'll be going over the decision in detail today:

He said it could contradict what's in the Residential Tenancy Act but being from a legal background he'd like to look at the rationale behind the judge's decision before making any conclusions.