Hey BP Members,
My situation on hand is my SFR suffered fire damage due to an unattended stove. As per tenant the wrong burner was turned on and a pan of grease left on stove caught on fire. The result is I probably have a few thosand dollars worth of damages. New stove & vent needs replacing, sheetroock work. Some wires in attic needs replacing and I have a golf size hole in roof, amongst other things. The fire department turned off power and removed electrical meter. Should the tenant be responsible for the damages since their neglect caused the fire or do I need to report this to my insurance company. I do not want my insurance dropped or have premiums increased. I feel it is unfair for me to swallow the damaged since they caused it. Would u continue with their tenancy? All feed back is appreciated.
I'd go to my insurance policy for sure. They may choose to come after the tenant ("subrogate"), depending on the total payout. If the tenant has renter's insurance, your insurance is more likely to subrogate. If your insurance wins subrogation, they will often collect your deductible as part of that process (and return it to you).
This is exactly what you have insurance for. Use it!
Focus on getting the property repaired and the CoO back; worry about your insurance rate later.
Fortunately no one was hurt, though that sounds like more than a "few thousand dollars" of damage.
Definitely contact the insurance company. I've been part of a few fires, and the insurance company is usually very helpful and the payout is usually surprisingly high. You will be shocked at the estimates to fix everything.
Institute a policy that your tenants carry renter's insurance and provide you proof of coverage every year. In my leases, if they don't get coverage within 7 days I can act as their agent and purchase it for then.
For my last tenant, I bought $100,000 worth of liability for $75 a year. This way if they cause a fire, the tenant's insurance covers the damage and my insurance will not take the hit.
I guess your right. This is my first time experiencing such in my 6 years of investing. I know insurance companies can be punitive because of claims. My belief is if damages are not too costly it may be better to deal with them without the insurance company. It is difficult for me to wrap my head around the issue of neglect that caused the fire. Thanks for the feed back.
I'm so sorry you're experiencing this mess! But really, anybody can turn on the wrong burner, I don't think it's fair to classify that as neglect by the tenant.
I agree with the others, this is what insurance is for. Fire remediation is expensive, your chances of getting that kind of money out of a tenant are slim to none, and I don't think a court would back you up anyway if it came to that.
@Bridget Smith-Osbourne You may easily take a hit to your premium because of the fire, but you should certainly make a claim against your policy. And contact a public adjuster if the settlement your insurer offers seems low.
After the fact, there are a couple of ways to mitigate the inevitable premium hike. First, institute a renter's insurance policy if you don't already have one. (That policy doesn't cover your property, but it shows a protective position.) Second, take a look at your screening process and find a way to add another layer. (This communicates an increased commitment to avoiding future problems.) Third, consider installing the Stovetop Fire Stop. (This would have stopped the fire you had, so it shows you're learning from the situation.)
Doing those things allows your broker to present a case to carriers that you're going to be less of a risk now that you've had a loss. Statistically, those who experience losses are substantially more likely to experience another one, which is the math behind the inevitable rate hike.
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