Our insured has a single-family rental dwelling insured on a DP-3.  His tenants notified him they were vacating, but before he could inspect the dwelling in their presence they left.  When he went to the dwelling, he found that the bathroom had been remodeled.  The plumbing had been improperly installed, resulting in a leaking commode.  The tub drains onto the front lawn.  Several closets had their doors removed and shelves installed.  In the kitchen, cabinets were removed and a large cabinet containing a built-in oven was installed.  Additionally, the carpet was worn in several places, there were nail holes in the walls from pictures, and several windows in the living room would not open and close.

Our insured, who did not inspect the dwelling for seven years prior to discovering the loss, now wants the dwelling restored to its original condition.  We do not think the loss is covered.  What is your opinion?

Florida Subscriber

Although it may appear that the tenant made improvements to the property (the tub draining onto the lawn notwithstanding), the truth is that the insured has suffered a loss that is not excluded under the DP-3.  His property has been vandalized in that the original state of the property has been defaced by the new additions.  Though the prudent landlord might inspect the property on a regular basis, there is no requirement that he do so.  If the insured had discovered the improvements the day after they had been made coverage would have applied.  The lapse of time does not affect this.

We do not see coverage, however, for the worn carpet and nail holes.  These are normal wear and tear occurrences, and are expected (and therefore uninsurable) in a rental property.  The condition of the windows, unless there is evidence of vandalism, appears to be the result of inadequate maintenance, and therefore not covered.

Note, however, that our answer applies only in the absence of specific lease terms. If the lease terms disallowed the tenants to make improvements to the premises, then vandalism has occurred; if the lease provided that the tenants could make modifications to the premises, then no vandalism occurred.

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