Our insured owns a rental dwelling. The liability coverage for that dwelling is extended from his homeowners policy.

Recently a bad circuit breaker in the rental dwelling shorted out and damaged the tenant's TV and VCR. Our insured paid his tenant for the damage and submitted the bill to us for reimbursement, which we in turn submitted to the insurer.

The insurance company has denied payment on the basis that the insured was not liable for the damage. Shouldn't the tenant expect that he can safely use his personal property inside the rented dwelling, without the fear of it being damaged?

Is it true that the building owner has no liability to his tenant?

California Subscriber

Just because the insurer thinks your customer is not liable to his tenant for the damage, doesn't necessarily make it so. Liability is ultimately a matter for a court to decide. If the tenant were to take the matter to a small claims court and the court decides that your insured is liable for the damage to his tenant's TV and VCR, then your insured's liability coverage would cover it.

Note, however, that a Section II Condition of the homeowners policy prohibits the insured from making any voluntary payments. Without a judgment of liability against the landlord or a determination by the insurer that the policy will respond, the voluntary payment by the insured may not be recoverable by the insured. The lesson here is to contact the insurer prior to making payments or an admission of liability.

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