Real Estate Investor · Renton, WA · Member since 2017 · 6 posts · 1 vote
A tenant caused water damage to my mid-level condo. The water went down to the lower units and caused water damage there. My insurance is covering her damages to my unit under a malicious mischief claim. The damage was such that the fire department said that unit was unsafe to occupy. They posted a "do not occupy notice". I'm pursuing eviction. My tenant does have renter's insurance, including liability. The HOA agent said he will not file any claim on the master policy, and will bill me for all damages. The reasons given were as follows: 1) The problem originated from within my unit. 2) I'm responsible for tenant actions. My question is how to deal with the tenant water damage to the common areas and to the other owner's units? The HOA manager is making it sound like I have unlimited liability here. My guess is that the HOA will bill me for all tenant damages, and file a lien. I expect a barrage of invoices from the HOA. Can I use my own liability coverage for tenant-caused property damage bills? Can/should I file a master policy claim against the wishes of the HOA agent for common property damages? I've exchanged insurance information with the other owners.
Specialist · Strongsville, OH · Member since 2016 · 303 posts · 217 votes
9y
This will be a fight amongst the attorneys and insurance carriers. *I'm NOT an attorney and this is not legal advice* I am however an insurance agent and here is my gut how this will work out. If this was an intentional act by the tenant any insurance that person carried will not pay. The damage to your unit is a civil matter between you and the tenant i.e. not covered by your policy. The damage to the personal property of the tenants in the lower units should be covered by their renters insurance assuming they have it. The damage to the physical lower unit itself should be covered by their unit owner / landlord policy. Depending on the wording the master policy for the building probably covers "from the exterior walls to the studs" or something like that and unit owners policy covers "from the studs in". The master policy will most likely not cover any damage to the interior of any units themselves which is why they won't file on the master policy.
Good luck. I always recommend to my landlords to put in the lease a clause saying something like the tenant is required to carry and show proof of renters insurance and that their failure to get renters insurance nor your failure to inspect for renters insurance relieves them of the duty to carry it. Ask your attorney to type that one up.
I'm also seeing a lot more management companies demand proof of renters insurance from the tenants than ever before just because of situations like this.
Insurance Agent · Maitland, FL · Member since 2015 · 397 posts · 244 votes
9y
Not sure how you file against the master policy, you are probably not an insured.
Call your insurer and let them know about the third party claims. Sounds like you may have an expensive settlement on your hands.
Real Estate Investor · Renton, WA · Member since 2017 · 6 posts · 1 vote
9y
Do I then have unlimited risk to the HOA for my tenant going rogue like this? Seems the tenant deliberately flooded the lower units.
My own condo unit is covered under malicious mischief. Yet, this is the less worrisome part of the damage inflicted by this tenant. She also damaged all the lower units. If a tenant "snaps" and perpetrates a huge water loss, or burns down a multi-family building, is the landlord "ruined" because no insurance product exists for such a scenario? No security deposit anticipates such extremes.
Specialist · Strongsville, OH · Member since 2016 · 303 posts · 217 votes
9y
This will be a fight amongst the attorneys and insurance carriers. *I'm NOT an attorney and this is not legal advice* I am however an insurance agent and here is my gut how this will work out. If this was an intentional act by the tenant any insurance that person carried will not pay. The damage to your unit is a civil matter between you and the tenant i.e. not covered by your policy. The damage to the personal property of the tenants in the lower units should be covered by their renters insurance assuming they have it. The damage to the physical lower unit itself should be covered by their unit owner / landlord policy. Depending on the wording the master policy for the building probably covers "from the exterior walls to the studs" or something like that and unit owners policy covers "from the studs in". The master policy will most likely not cover any damage to the interior of any units themselves which is why they won't file on the master policy.
Good luck. I always recommend to my landlords to put in the lease a clause saying something like the tenant is required to carry and show proof of renters insurance and that their failure to get renters insurance nor your failure to inspect for renters insurance relieves them of the duty to carry it. Ask your attorney to type that one up.
I'm also seeing a lot more management companies demand proof of renters insurance from the tenants than ever before just because of situations like this.
Real Estate Investor · Renton, WA · Member since 2017 · 6 posts · 1 vote
9y
@Michael Norris The damage to my unit by my tenant is vandalism. My HO6 policy covers vandalism. There is an exclusion if I vandalize my own unit, or direct someone to do so. No such exclusion exists if my tenant is the vandal. The damage to the lower units' real and personal property is a consequence of the vandalism to my own.
I do require proof of renter's insurance in my leases. Agreed it is must-have protection. I'll be adding 'additional interest' as a requirement.