Question from larry updated on 13th December 2019:
We have tenanted a small one bed studio. During the tenant's occupation a pipe burst flooding the bedroom. The tenant temporarily vacated. We removed the carpets and placed a dryer/blower overnight. We arrived next morning to find the appliance had failed and caused a fire causing extensive smoke damage to the tenant's possessions. The tenant was reportedly underinsured by some $10,000 and is pursuing reimbursement. My question is are we liable for the shortfall of our tenant’s insurance?
Our expert Rene Swindley responded:
My initial reaction is no, you are not liable to your tenant. But as there are a whole set of legal principles that underpin the determination of liability (in this case a landlord to its tenant), it's unfortunately not that straightforward. In the scenario you have described it appears that unless the tenant can prove that you knew the heater was faulty or that you used the wrong type of heater for the job, then it is unlikely that the tenant (or their insurer) can hold you liable for their loss.
So my advice is that you shouldn’t be rushing to take responsibility for this. There is a process and, sometimes, a cost involved in determining liability between parties. That’s why it is important that you have a robust rental property insurance policy with landlords liability cover, which means that your insurer will step in to represent and protect you. If you do have landlord’s liability cover, make sure that you advise your insurer at the first sign of the tenant’s attempt to hold you responsible.
Rene is the founder of digital insurance platform Initio, which is about insuring houses online in real time to provide a faster, smoother and customer-first approach to property insurance.