$10k in water damage caused by tenant. Advice on how to handle.
Member since 2021 · 87 posts · 41 votes
$10k in water damage caused by tenant. Advice on how to handle.
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If you collect the 10K from the renter will you reimburse that 10K to the insurance company?
To me it seems like you've been paid already, and are these the type of renter you can collect 10K from?
If they had 10K they'd probably buy a house- most renters are poor.
Would a court allow you to collect twice- make a windfall profit on this mistake in renter judgment?
Just my 2 cents.
17 Replies
- Property Manager · DE · Member since 2023 · 248 posts · 133 votes1y
Quote from @William C.:
We own a SFH long-term rental. We self-manage. We have good tenants in there entering year 2 of a 2 year lease. One of the tenants hung a picture on a wall, puncturing a water pipe. There was a leak and about $10k in water damage done. I filed an insurance claim on our landlord insurance and got a remediation team in there immediately to stop the damage. The tenants are clearly responsible here. How would you all handle this? I can provide additional info as needed. Thanks for considering.
I would let them know they are responsible and inform them they can make a payment plan if needed. Check with their renter insurance (we require them to have this) to see if they will cover. If they dispute it, you may need an attorney.
If you collect the 10K from the renter will you reimburse that 10K to the insurance company?
To me it seems like you've been paid already, and are these the type of renter you can collect 10K from?
If they had 10K they'd probably buy a house- most renters are poor.
Would a court allow you to collect twice- make a windfall profit on this mistake in renter judgment?
Just my 2 cents.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
@Nathaniel C.
I assume you have put them on notice. Did you also notify their renters insurance?
If you collected an insurance claim you would only be able to collect your out of pocket (ie deductible).
I would absolutely collect that from them if they were properly notified
7e investments53 Reviews - Member since 2021 · 87 posts · 41 votes1y
Quote from @Scott Mac:
If you collect the 10K from the renter will you reimburse that 10K to the insurance company?
To me it seems like you've been paid already, and are these the type of renter you can collect 10K from?
If they had 10K they'd probably buy a house- most renters are poor.
Would a court allow you to collect twice- make a windfall profit on this mistake in renter judgment?
Just my 2 cents.
More context on my end, the insurance claim has been made but has been paid yet. There is always a possibility of denial.
In no way am I trying to double dip. Looking for advice on how others would handle this issue with the tenants. Thanks.
- Member since 2021 · 87 posts · 41 votes1y
Quote from @Chris Seveney:
@Nathaniel C.
I assume you have put them on notice. Did you also notify their renters insurance?
If you collected an insurance claim you would only be able to collect your out of pocket (ie deductible).
I would absolutely collect that from them if they were properly notified
Can you define what you mean by notice?
If insurance approves the claim, I figure having the tenants cover the deductible would be fair.
- Property Manager · DE · Member since 2023 · 248 posts · 133 votes1y
Quote from @Scott Mac:
If you collect the 10K from the renter will you reimburse that 10K to the insurance company?
To me it seems like you've been paid already, and are these the type of renter you can collect 10K from?
If they had 10K they'd probably buy a house- most renters are poor.
Would a court allow you to collect twice- make a windfall profit on this mistake in renter judgment?
Just my 2 cents.
This is a good point and not one I thought of. If payment has been received from the insurance company there's nothing to collect. The time to get tenant insurance involved (if they have it, we require it) would be before the claim is filed.
- Member since 2021 · 87 posts · 41 votes1yThank you. Sloppy language by me. Insurance claim has NOT been paid. We have a duty to mitigate damages. So we moved forward with the claim and a mitigation company to address the damage.
Quote from @Laura Stayton:
Quote from @Scott Mac:
If you collect the 10K from the renter will you reimburse that 10K to the insurance company?
To me it seems like you've been paid already, and are these the type of renter you can collect 10K from?
If they had 10K they'd probably buy a house- most renters are poor.
Would a court allow you to collect twice- make a windfall profit on this mistake in renter judgment?
Just my 2 cents.
This is a good point and not one I thought of. If payment has been received from the insurance company there's nothing to collect. The time to get tenant insurance involved (if they have it, we require it) would be before the claim is filed.
- Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes1y
@Nathaniel C. Can’t you just provide your insurance company with tenant’s renters insurance policy info and allow insurance companies to hash it out? I think it’s reasonable for tenant to pay deductible if it really was their fault, if that’s allowed by your policy, but seems weird to me that you could expect tenant to know hanging a picture in that one spot would cause a leak. If tenant was warned not to hang anything there without using those sticky wall hangers, or if they used something not meant for home use, then maybe.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
I would require the tenant to file the claim with their renters insurance.
If they don't have renters insurance, then I would file a claim with my insurance and the tenant would be responsible for reimbursing me for the deductible.
If my insurance rejects the claim, then the tenant is responsible for the entire cost. I would allow a payment plan, but I won't spread the payments more than six months. A better option is for the tenant to take out a personal loan, pay me in full, and make payments to the bank.
The DIY Landlord Book4.7243 Reviews Keep in mind how most emergency remediation companies work: The actual damage was probably under 1,000 to repair but they charge 10,000 knowing that your insurance will balk at the $10k and contest that amount, then they will probably end up agreeing to pay 5k so. That’s still 4k in profit for the company. To fix this problem without involving all of this shenanigans would probably only cost a few hundred dollars in materials and a few hours labor. Just food for thought. Once you get remediation companies and insurance companies involved things get illogical quickly in my experience.
I’m saying this because the tenant will probably think that $10k to fix this is absurd and they are probably right. You mention they are a good tenant and if that’s the case, then I wouldn’t want to lose them over this.
At this point I would stick it out with insurance, and get renters insurance involved too because you’ve already racked up a big bill. Work something out amicably with the tenant such as splitting the deductible 50/50.
However in the future because of how these things tend to go, I would not have called insurance or a remediation company, I would have just fixed it immediately before it got too bad then warned the tenant not to do it again (and to be fair to them it’s odd that simply hanging a picture would cause a major plumbing leak, the likelihood of that happening is so low) and moved on.
Make it a standard practice to show all of your tenants where the main water shutoff valve is and label it clearly so they know how to shut the water off right away if something like this happens. Make sure it is somewhere easily accessible that doesn’t require any tools to turn off.
All the remediation company does is stop the leak/repair the plumbing, remove any wet materials, dry everything out with big fans and then replace whatever needed to be removed. Easy fix but they like to make it more complicated and more expensive so that they make more money. For example they say they use a special proprietary mold remediation serum that they spray to eliminate any mold growth, but mold armor from the hardware store/ bleach is the same stuff basically. They charge $200 when you can buy something similar for $5. They also tend to remove a lot more material than is really necessary. In my experience if you jump on it quick, you can dry everything out without removing much material, needing to get a dumpster and everything and balloon the costs up to a crazy number like $10k. But of course these companies get paid more to remove and replace more so they demo as much as they can and increase their costs as much as they can justify.
This is why I like to handle things like this on my own or have my trusted handyman handle them if I don’t have time, and save my insurance claims for the real big issues that occasionally come up. It’s a racket IMO.
- Member since 2021 · 87 posts · 41 votes1y
Quote from @Nathan Gesner:
I would require the tenant to file the claim with their renters insurance.
If they don't have renters insurance, then I would file a claim with my insurance and the tenant would be responsible for reimbursing me for the deductible.
If my insurance rejects the claim, then the tenant is responsible for the entire cost. I would allow a payment plan, but I won't spread the payments more than six months. A better option is for the tenant to take out a personal loan, pay me in full, and make payments to the bank.
Thanks for taking the time to reply. This seems like a reasonable solution. I am leaning towards attempting something along these lines. In the end I just want it to be fair for both parties. I think that gives us a good chance at tenant retention. With this being a high rent home and them being solid tenants, that is something we must keep in mind (but also not allow us to act foolishly in the name of retention).
- Member since 2021 · 87 posts · 41 votes1y
Quote from @Lynn McGeein:
@Nathaniel C. Can’t you just provide your insurance company with tenant’s renters insurance policy info and allow insurance companies to hash it out? I think it’s reasonable for tenant to pay deductible if it really was their fault, if that’s allowed by your policy, but seems weird to me that you could expect tenant to know hanging a picture in that one spot would cause a leak. If tenant was warned not to hang anything there without using those sticky wall hangers, or if they used something not meant for home use, then maybe.
Thanks for taking the time to weigh in. I am interested in being a part of the solution on this, so would love to hear more about your perspective on fault in this situation. Your opinion is the landlord would be at fault in this given situation?
- Lender · Seattle, WA · Member since 2022 · 482 posts · 768 votes1y
yes renter insurance claim from the tenant or file a claim with your insurance as well.
- 1yLeroy K. WilliamsPro MemberProperty Manager · Southfield Mi · Member since 2018 · 191 posts · 176 votes
How did the tenant respond when they were informed that they the cause of this problem? Did they offer to take care of it? I would start there. Next, 10k in damage seems excessive for an emergency leak, since if the leak was in a wall, it would most likely result in most of the water falling into a basement (if there is a basement) or it would pool along the floor. Replacing flooring, repairing a punctured pipe and repairing the wall hardly seems like 10k worth of worth.
if you have a good tenant you shouldn't attempt to capitalize on this obvious mistake. If you can have insurance pay for it that would be the way to go.
I would only look at this differently if the tenant was unapologetic and dismissive. In that case I may go after them. - 1yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@William C. We do our best to handle these types of problems ourselves without involving insurance.
If they have renters insurance I would go after that.
Handling these types of situations yourself can be much cheaper and save you the possibility of being canceled by your insurance company.
- Janesville WI · Member since 2019 · 55 posts · 36 votes1y
I agree with your approach of keeping it fair to both parties since they have been solid tenants so far.
If they have renters insurance, I agree with most others that they should try to go after that first.
Second, I would then work with them to cover the deductible and any insurance cost increase that results from that.
After that, I would work on putting in stud guard plates to prevent this from happening in the future when you open up walls. - Houston, TX · Member since 2015 · 261 posts · 170 votes1y
At the very least they should cover the deductible. I wonder if you can deduct from their deposit??
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