Landlords are liable for damage to houses accidentally caused by their tenants, according to a New Zealand Court of Appeal decision in a long-running insurance case.

The court has this month ruled in favour of Kenji and Teiko Osaki in a battle that has gone through NZ's Tenancy Tribunal, District and High Courts.

The Osakis and their children had been renting a house in Auckland owned by Andreas Holler and Katharine Rouse.

In 2009, Mrs Osaki left a pot of oil boiling on the stove which started a fire that caused nearly $NZ220,000 worth of damage.

Insurance company AMI initially indemnified the owners but then used their name to try and recover the money from the Osakis.

Under commercial property law, tenants have immunity in such cases and the Osakis argued it should also apply to residential cases.

In the Court of Appeal, Justice Helen Winkelmann found in their favour.

The decision, which may still be appealed, sets a precedent under the Property Law Act.

In the past some insurance companies have used a technical argument to recover losses from tenants, such as student renters, according to Assure Legal.

However, landlords may now find their insurance premiums rising as a result, lawyer Richard Flinn told RNZ.