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The REAL Value of a Renter's Policy (and EXPERT Advice)

Question... "I was a renter in the same residence for nine years, and had an accidental fire which severely damaged one room. Not only did our landlords ask us to leave, but now their insurance company is coming after us for the claim. (We received none of this money, by the way.) We did not have renters insurance, which I am being led to believe would not have covered the dwelling, only the contents or my personal belongings. I have never heard of this, and I haven't recovered from my own losses. What are my rights and what can I do to stop this?"

Answer? You're right in believing that renters insurance only would have covered your personal belongings. Insurance for the structural space you are living in should be covered under your landlord's policy. Even if your landlord has not purchased landlords insurance, this does not mean that liability lies with you. According to [Here the site names an insurance company that shall remain anonymous (despite their indirect connection to Peter Sellers) because we can't believe that someone there actually said this. - Ed.], the fact that you do not own the property means that you are not legally liable for damage done to it. You should ask your landlord's company to give you the rule in writing that allows them to come after you for payment.

Disclaimer: We are consumer journalists, not financial planners or insurance brokers. So, while we try our best to answer your questions, nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.

Faculty Responses

To quote Perry White of the Daily Planet, "Great Caesar's ghost!!!" Imagine the potential liability of an insurance agent if he/she gave this kind of advice! They have a disclaimer (see above) that they are only consumer journalists...if so, why not stick to consumer issues as opposed to technical advice? Makes you wonder if some states would prohibit this as an unlicensed activity...either insurance or law. In any case, several of our faculty members couldn't resist writing to the "journalist." Below are their emails (edited so as not to violate any community decency standards)...note that the last one reveals a critical renter's policy coverage that's often overlooked.

Faculty Response
It's clearly possible that if she had purchased a homeowners (renters) policy on her belongings, the policy would have also responded for the structural damage caused in the fire. If she had been negligent in causing the fire, perhaps by way of allowing an unattended pan of grease to cause the fire, then she would in most cases be deemed to have been negligent and the "renters" policy would respond for the subrogation papers the insurance company has sent her. Clearly, the insurance company covering the building feels there is some negligence on the part of the tenant by way of "coming after her," as the article states. Even if she is not negligent in the fire a renter's policy would DEFEND her in the claim and defense costs alone can easily bankrupt many apartment dwellers.

When I lived in an apartment over 30 years ago, a tenant in another building on the complex left an unattended charcoal grill he had just started to answer the phone. After 20 minutes on the phone, he noticed an "orange glow" coming from his living room and smelled smoke. His grill had caught the balcony upstairs on fire, spread to the roof eaves, and shot down an un-firestopped attic space. To make a long story short, the entire 16-unit apartment building was a total loss, along with the contents of all 16 tenants, none of which (according to local news accounts) had any renters insurance. The tenant soon discovered that he was responsible for the destruction of a $600,000 apartment building and all of the tenant contents. He was fortunate no one was hurt.

Since an HO-4 policy typically includes just $100,000 in liability coverage (some "renter's" policies only include $25,000 coverage), this illustrates why someone living in a multiple-unit building like an apartment or condominium unit has a great need for a personal umbrella policy in an amount at least equal to the cost to replace the building and all of its estimated contents values.

Your statement of "You're right in believing that renters insurance only would have covered your personal belongings" is not correct and would lead one to believe that a "renter's policy" ONLY covers personal belongings, which is certainly not the case. Liability and defense coverage's are some of the most valuable coverage provided in the typical "renter's insurance" policy.

I was very disappointed in the reply  made in your Q&A column of June 23, in regards to a renter who experienced fire damage to both her personal property and the landlord's building. The reply indicated that damage to the landlord's building was not covered by a renter's policy. Actually, the industry-standard renter's policy ("HO-4") does have coverage under the Section II Liability provision for property damage to the property of others, if the insured (renter) is legally liable. There is specific coverage for what the insurance industry refers to as "fire legal liability." That is, if the tenant causes fire damage to the landlord's building, the tenant's HO-4 renter's policy will cover the fire damage, up to the Section II limit of liability, usually $100,000.

Even if the landlord had insurance, that does not relieve the tenant of responsibility. After the landlord's insurer pays the claim, the insurer will seek recovery against any party which might have negligently caused the damage (known as "subrogation"). If the tenant's negligence caused the fire, the landlord's insurer will in all likelihood seek recovery from the tenant (whether or not the tenant has insurance). However, if the landlord has waived subrogation against the tenant, his insurer cannot bring an action against the tenant.

It was also stated that a person isn't legally liable for damage to property if they don't own it. That is ridiculous! If someone hits your new car, would you expect that they aren't liable because they don't own it?? On the contrary, you would expect the negligent party to pay for the damage to your car, rather than your own insurance company. That's pretty much how the landlord would feel. Overall, I do enjoy your web site.

Faculty Response
Just a quick note about the response in the June 23 Q&A article at your web site...

First, a renter's policy (commonly called an HO-4 Tenant's Form) does, indeed, cover damage to the occupied unit, typically up to $100,000, under the Liability section of the policy. Normally, damage to property in your care, custody or control is not covered, but an exception is made for this and other situations.

In fact, when I have trained agents in the past, I often make the point that the best candidate for a personal umbrella policy is a renter or condo owner who can negligently burn down the building in which they reside, along with the contents of others...not to mention the potential liability for loss of life. It's the liability insurance in a renter's policy that is of the greatest value, not the meager coverage typically provided on personal belongings.

In addition, because apartment dwellings live in such close proximity, when it comes to potential claims for invasion of privacy or wrongful entry, they are even more likely candidates for personal injury protection than insureds who own their own single family residences. Accidentally walking into another apartment, entering because you heard something you thought was a call of distress, or being accused of being a "Peeping Tom" are all examples of where personal injury coverage, typically added by endorsement, can come in handy.

Second, with regard to the statement "According to [anonymous company], the fact that you do not own the property means that you are not legally liable for damage done to it. You should ask your landlord's company to give you the rule in writing that allows them to come after you for payment."...

I can't believe that a [anonymous company] representative made this statement...most likely what he/she said was you usually cannot be held liable for damage to property you OWN, not property you do not own. As far as asking for the "rule" in writing that allows them to come after you, you'll find that "rule" in every freshman law book in the's a fundamental legal principle that you have the right to recover for damages negligently caused to you or your property.

So, the landlord's insurance company, under the right (by common law or contract) of subrogation, has every legal recourse against the tortfeasor as does the landlord. Most commercial property policies, though, allow the landlord to waive this, ultimately, it's up to the landlord as to whether the insurer can pursue this claim. The way this works in most cases is that the landlord's property insurer pays for the damages, then subrogates for recovery from the negligent person's liability insurer.

The response in this article is completely inaccurate and a disservice to those who view it. Even though you have a disclaimer on the page, I suspect it would be in the best interest of [web site] to remove or revise this article. I hope you will take this "criticism" in the spirit in which it was give notice that you have content with factual errors in order for you to be able to better serve your visitors and avoid any liability that may be incurred.

If I or any of our expert faculty can be of assistance to you in the future, please feel free to let me know. [Web site] is an excellent site for its intended audience but, like all of us, we're not perfect and we can make mistakes. I hope this information helps.

Contact us and see how we can save you money today!

Posted 10:45 AM  View Comments

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