Does my liability insurance cover fallen tree damage in property?

Question

Hi!

I am renting a farm and my lease says I need property damage coverage and I am responsible for any damages (so landlord is not responsible).

I have liability coverage, which supposed to cover damages to a third party. If a tree falls on an outbuilding, would my liability coverage cover this? I don't own the property but caused damage to someone else (owner) and I can be legally held responsible (according to lease).

In short: I do not have insurance on dwelling since I do not own the property but if a tree falls on a building, would my extensive liability insurance cover me from the landlord's claim since it is spelled out in the lease?

thanks!!!

Bill Gulley · Answer

First rule of casualty insurance, before a policy can be offered or obtained the insured must have an insurable interest in the property to be insured, the insured must sustain a financial loss from an insured peril. If that tree falls, will you lose money? No. You said it's not a crop, so you have no financial interest in it. If a building burns down do you have the financial obligation to rebuild it? No. You have a leasehold interest. You can't be held liable to replace the building unless you caused a fire and that is a liability issue not a casualty matter.

Sounds to me that your farm is more of a residence that you can farm rather than a large corporate farm operation and the owner is pulling one to get the tenant to insure his improvements calling it commercial. This will get into state law and as to the primary use of the property, having 40 acres doesn't make it commercial. The owner insures property and includes the cost in the rents.

No, your landlord probably won't try to terminate your lease for the insurance, has he ever brought up the issue or did you just discover this? Sounds like you found the issue and I'd think he would have the place insured, especially if he has a mortgage on it.

As Jon mentioned, ask your attorney. You might ask the landlord saying you just discovered the issue, it may not be an issue at all, something he thought of 4 years ago and has long forgotten and changed. I'd start there first.

And, 4 years into the same lease, maybe it is a real farming operation. :)

Jon Holdman · Answer

Nope to that, too.

Account Closed · Answer

Since the lease says I must provide proof of such policy on or before my commencement date. I did not do so for 4 years into my lease. May I claim that the lease is not valid since I failed to provide the policy upon my move-in?

Wayne Brooks · Answer

Nope.

Account Closed · Answer

Thank you, Jon!

I already have the policy and the tree damage. Now looking at my policy, I am hoping that the liability sections covers me as I am legally held responsible and that is spelled out in the liability section of the policy. My insurance agent was familiar with the lease as he covered other farmers like me from the same landlord and same lease. I am just surprised why did not give property coverage, only liability. Again, I am hoping the liability covers me in this situation, and hence my original question.

Michaela G. · Answer

I'm not an attorney and really am just guessing when it comes to this, so please take my opinion with a grain of salt ;-).

I can not believe that you, as a tenant, would be responsible for tree damage.

And then there's that little law that doesn't allow someone to make you sign away your rights. So, I don't believe that the landlord would be allowed to hold you responsible in a lease for things that a tenant is normally not responsible for.

So, if your roof caves in, he can't say: well, that's your problem, even though he made you sign a lease that says that you have to be responsible for any damage.

Jon Holdman · Answer

It is entirely possible for a lease to put all responsibility onto the tenant.  That's very common in the commercial space.  This sounds like a semi-commercial situation.  You really want to have your attorney review the lease and explain to you exactly what it makes you responsible for.  And then have a conversation with your insurance agent about your coverage to be sure you've covered everything you're responsible for.  And read your policy.  Reading a policy can be a real eye opener.

Wayne Brooks · Answer

It sounds like you are leasing the buildings as well, since your lease specifically requires you have insurance for the buildings, which you don't have.  Get some.

Account Closed · Answer

Thanks Bill! It is not a tree farm and it is a healthy tree. I agree, no such coverage is normally available but in the lease they make it sound like I need a homeowner policy as opposed to tenant policy (which is ridiculous in my opinion).

Account Closed · Answer

Thank you, Michaela!

Do you remember what is the name of the law? I can't seem to find it.

The lease says that I need coverage to the limit of property value and include fire, vandalism... etc. Also, it makes me responsible for any property damage, including tree falling. My insurance only gave me liability and I am hoping it covers me as it states that it covers me when I am "legally obligated to pay as damages because of bodily injury or property damage". I did not get property coverage (I did not explicitly ask) since I do not own the property.