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Adjusting Subrogation Claims When a Landlord’s Insurer is Subrogating the Landlord’s Tenant


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Authored by Eric R. Elms, Esquire, an associate with the Fisher Rushmer firm in Orlando. He focuses his practice in insurance, civil litigation, collections, commercial and business litigation, employment and professional liability matters. Eric can be reached at (407) 843-2111 or via email at 

You just received a subrogation demand from an insurer whose insured rents their property to your insured, the tenant. Your insured’s negligent acts or omissions allegedly caused the landlord’s insurer to pay for damage to the rented property. Likely, the subrogation demand doesn’t include the one document that determines whether you owe subrogation in this landlord/tenant situation. The lease between the landlord and tenant is significant in determining whether the landlord’s insurer can seek subrogation against the tenant. Before you review the subrogation demand any further, ask the landlord’s insurer for the lease.

Is the Tenant an Implied Co-Insured?

If the terms and conditions of the lease tend to indicate the tenant is an implied co-insured, then the landlord’s insurer cannot subrogate against its own co-insured. The rationale behind the Implied Co-Insured doctrine is that a reasonably prudent tenant will generally rely on the landlord to provide fire insurance protecting the insurable interests of all joint owners including the interests of the tenant. The tenant will be considered an implied co-insured if the lease explicitly states the landlord is to maintain fire insurance or if the lease absolves a tenant from liability for a fire loss. However, there are cases in which the language of the lease will not be so instructive.

In cases where it is not clear whether the landlord intended to shift the risk of property damage loss from the landlord to the tenant, courts will use a case-by-case approach to analyze the landlord-tenant lease to determine the parties’ reasonable expectations as to who should bear the risk of loss. The case-by-case approach avoids presumptions that the landlord and tenant are co-insureds. A court will not consider the landlord and tenant as co-insured unless the landlord/tenant lease indicates otherwise.

Lease Provisions Indicating the Tenant Is or Is Not a Co-Insured

When examining the lease, look for provisions stating (a) which party agreed to buy and maintain fire insurance, (b) which party agreed to repair property damage, and (c) whether the tenant was to share in the cost of the fire insurance via an added fee to the tenant’s monthly rent. A lease provision stating the landlord would procure fire insurance, and repair fire damages at its expense, while the tenant would pay their share of the fire insurance indicates a tenant is a co-insured. Generally, in a lease there will be provisions entitled, “Damage to Premises,” “Insurance,” and/or “Dangerous Materials.” Check these provisions to ascertain whether the landlord assumed responsibility to buy and maintain an insurance policy or forego holding the tenant liable for negligence. The lease will need to state in unequivocal terms the landlord intended to limit the tenant’s liability for negligence.

In a commercial context, there are three additional lease provisions to be considered, the “Additional Insured” provision, the “Indemnify and Hold Harmless” provision, and the “Surrender the Premises in Good Condition” provision. A lease provision requiring the tenant to buy and maintain a general liability policy naming the landlord as a co-insured, a lease provision in which the tenant agrees to indemnify and hold harmless the landlord for any claim of damage arising out of the tenant’s negligence or use of the premises, or a provision mandating the tenant surrender the premises in good condition, may not indicate a landlord intended to shift the risk of property loss to the tenant. These three provisions are considered general provisions, which do not control over specific provisions in a lease. Notwithstanding the presence of these three general provisions in the lease, if the specific provisions in the lease reflect the landlord and tenant intended the risk of loss to be born by the landlord’s insurer, then that insurer cannot subrogate against the tenant.

In sum, when you have an insured whose negligence may have caused property damage to property he or she does not own, request a copy of the insured’s lease with their landlord to determine whether the insured may be responsible for paying back the landlord’s insurer. The terms of the lease could indicate your insured is not liable for paying back the landlord’s insurer.