Tenant Vacating / Insurance Claim??

14 Replies

I'm going to give a tenant a 30+ day notice to vacate by September 30. Last night, they had a kitchen fire, causing minor damages. I'm wondering if I should have them file an insurance claim, or just keep their deposit when they leave next month? Or both??

You need to file the claim with your insurance company. Bill the tenant for your costs to repair from their deposit plus if necessary.

Take them to small claims court to collect if necessary. 

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@Mark Douglas - Who would the tenant file a claim with? Even if they have a renters insurance policy, that will likely only cover their own personal property - not the building itself. 

You don't say how much damage was done or what your deductible is, but one option would be for you to file the claim under your own insurance (if it's worth it to do so since you said it's just minor damage). 

You also may be able to recoup any out of pocket costs you incur from the tenant (either from their security deposit or by taking them to small claims court if the cost exceeds their security deposit), assuming of course they are responsible for the fire due to some sort of negligence on their part  

Insurance for rental properties is much tougher than in the past. Filing a claim will absolutely increase your premiums and will make it much harder to shop insurance later. Assuming the damage is small I would pay out of pocket and keep the damage deposit (assuming that's allowed in your lease).

Originally posted by @Kyle J. :

@Mark Douglas - Who would the tenant file a claim with? Even if they have a renters insurance policy, that will likely only cover their own personal property - not the building itself. 

You don't say how much damage was done or what your deductible is, but one option would be for you to file the claim under your own insurance (if it's worth it to do so since you said it's just minor damage). 

You also may be able to recoup any out of pocket costs you incur from the tenant (either from their security deposit or by taking them to small claims court if the cost exceeds their security deposit), assuming of course they are responsible for the fire due to some sort of negligence on their part  

 Hi Kyle,

I was under the impression that some renters' policies pay for some tenant damage to the rental property.  My understanding was that this is part of the overall goal of limiting a tenant's costs associated with any loss incident.  Instead of loss of personal property, this would be loss of money for damage to the rental property.

Hopefully, an agent or two can clarify that for me/us.

If renters insurance applies, yes it would cover fire and smoke damage. But don't expect it to be a fun experience. You are adverse party filing a liability claim. So it all depends on their position. Also it will not pay replacement cost. Only depreciated costs. What is insurance people call actual cash value.

Originally posted by @Account Closed :

Insurance for rental properties is much tougher than in the past. Filing a claim will absolutely increase your premiums and will make it much harder to shop insurance later. Assuming the damage is small I would pay out of pocket and keep the damage deposit (assuming that's allowed in your lease).

On point with this. We had a tenant years ago burn down a townhouse because of smoking in the backyard, police never could prove that the tenant did it, they skipped town like a ghost when the cops started asking questions.. In any event, it took our insurance from around $300 a year, to $300 a month for 3 years. Now of days we put fire extinguishers in every unit, have tenants cary renters and liability insurance, plus keep damage insurance, as a service included in the rent, for them that coverages any damages, like pipes, flooding, and fires. Keep the insurance for when the property is beyond repair in a reasonable budget.

Originally posted by @Randy E. :

 Hi Kyle,

I was under the impression that some renters' policies pay for some tenant damage to the rental property.  My understanding was that this is part of the overall goal of limiting a tenant's costs associated with any loss incident.  Instead of loss of personal property, this would be loss of money for damage to the rental property.

Hopefully, an agent or two can clarify that for me/us.

The renters policies I've seen have primarily provided coverage for two things: 1) the tenant's personal property, and 2) liability coverage in the event the tenant is found liable for injuries to other people or damage to someone else's property.  

So maybe, assuming the tenant is responsible for the fire and they have renters insurance and their policy includes liability coverage, there could be some claim against that portion of their policy for the damage from the fire?  I don't know for sure, but like you said maybe an actual insurance agent will know. 

I'd be hesitant to make the claim against my own insurance policy though as the owner, since it sounds like the damage was minor and I'd hate to risk my rates going up or my policy being cancelled just for some minor damage.

Yes, if the cause of loss is smoke, fire, or explosion, renters insurance will cover for their negligence. Again, that is a standard policy, their policy could easily deviate from standard. Also it will not pay your full claim, only depreciated value.

Originally posted by @Derek Lacy :

Yes, if the cause of loss is smoke, fire, or explosion, renters insurance will cover for their negligence. Again, that is a standard policy, their policy could easily deviate from standard. Also it will not pay your full claim, only depreciated value.

 Thanks for that.  

Personally, I'd take that depreciated value claim, cover any shortfall out of pocket, and consider it as the cost of doing business.  In the end, it's better than paying out of pocket for everything.

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Originally posted by @Kyle J. :
I'd be hesitant to make the claim against my own insurance policy though as the owner, since it sounds like the damage was minor and I'd hate to risk my rates going up or my policy being cancelled just for some minor damage.

 I agree 100%.  It would have to be substantial damage for me to engage my landlord's insurance policy. 

@Derek Lacy right on the money.  I'm waiting on the adjuster's report, but I was told I'd only receive the depreciated value.  Maybe only a couple hundred bucks, but like @Randy E. said, just cover the difference and move on.