Rental home fire

[checko12]

Jurisdiction

North Carolina

Rental Home we own caught on fire. The tenants who were there currently left a space heater on. Fire was isolated in the living room but obviously there's smoke and soot every in the home. Our insurance company paid out money but repairs look like they exceed that. Is there anything we can do to make sure repairs and damages stay within the money we were given? Also important to note, we have not yet heard anything from the tenant's renters insurance as this is all relatively recent.

 

[Zigner]

Rental Home we own caught on fire. The tenants who were there currently left a space heater on. Fire was isolated in the living room but obviously there's smoke and soot every in the home. Our insurance company paid out money but repairs look like they exceed that. Is there anything we can do to make sure repairs and damages stay within the money we were given? Also important to note, we have not yet heard anything from the tenant's renters insurance as this is all relatively recent.

Generally, renter's insurance won't cover damage to the building or fixtures. (EDIT: Except for fire, smoke, or explosion, as pointed out by @adjusterjack - I stand corrected.)
There's really no way we can tell you how to spend the money in order to avoid the consequences of being underinsured.

 

[adjusterjack]

Our insurance company paid out money but repairs look like they exceed that.

Why?

Is there anything we can do to make sure repairs and damages stay within the money we were given?

Sure. Interview several reputable well reviewed licensed, bonded, and insured contractors. Hand them the insurance estimate. Ask them if they can do the work for that amount. If yes, get a WRITTEN contract with the estimate's scope and prices in the contract.

Also important to note, we have not yet heard anything from the tenant's renters insurance

Did you call up the tenant's insurance and report the claim? Get a claim number? Talk to an adjuster? If no, what are you waiting for. The squeaky wheel gets the grease.

Might interest you to know that a tenant's policy doesn't cover the tenant's negligent damage to the rental, EXCEPT for fire.

As long as your insurance is paying, you might as well just turn the tenant's insurance information over to your company for subrogation against the tenant's insurance.

The advantage there is the claim gets settled faster with less hassle. And if you have Replacement Cost coverage you eventually end up with the full cost of repairs. The tenant's policy will only pay ACV (depreciation).

 

[adjusterjack]

Generally, renter's insurance won't cover damage to the building or fixtures.

Except for fire, smoke or explosion. The standard HO-4 Liability section excludes:

"Property damage" to property rented to, occupied or used by or in the care of an "insured". This exclusion does not apply to "property damage" caused by fire, smoke or explosion;

Proprietary forms that I have seen contain the same or similar wording.

These tenants lucked out. Yeah, it's tragic but, in this case, their negligence won't drive them into bankruptcy. They probably have no clue yet. I'm sure that the OP has no idea that a tenant's policy covers them for nothing except fire, smoke or explosion.

 

[Zigner]

Except for fire, smoke or explosion. The standard HO-4 Liability section excludes:

"Property damage" to property rented to, occupied or used by or in the care of an "insured". This exclusion does not apply to "property damage" caused by fire, smoke or explosion;

Proprietary forms that I have seen contain the same or similar wording.

These tenants lucked out. Yeah, it's tragic but, in this case, their negligence won't drive them into bankruptcy. They probably have no clue yet. I'm sure that the OP has no idea that a tenant's policy covers them for nothing except fire, smoke or explosion.

Thanks for the information - I will edit my post.

 

[Zigner]

Please ignore this post.

 

[checko12]

Why?

Did you call up the tenant's insurance and report the claim? Get a claim number? Talk to an adjuster? If no, what are you waiting for. The squeaky wheel gets the grease.

Might interest you to know that a tenant's policy doesn't cover the tenant's negligent damage to the rental, EXCEPT for fire.

As long as your insurance is paying, you might as well just turn the tenant's insurance information over to your company for subrogation against the tenant's insurance.

The advantage there is the claim gets settled faster with less hassle. And if you have Replacement Cost coverage you eventually end up with the full cost of repairs. The tenant's policy will only pay ACV (depreciation).

You're right. We had several contractors come by that gave us quotes to fix more than what was needed I feel. The home was built in the '20s and the plaster helped isolate the fire to the room the space heater was in. Although there's soot all over I feel like we can really clean the rest of the home and concentrate on repairing the damage in that room alone.

The property is looked over by a management group since we're in another state. The renter's insurance policy has been forwarded to the adjuster overseeing the case. Why has it taken so long? I couldn't tell you tbh. We have left countless messages to NCJUA with no replies at all.

 

[adjusterjack]

Ah, NCJUA - the insurance company of last resort for non-standard properties.

According to the website Replacement Cost and ACV coverage are both available so it depends on which coverage you have as to whether you have enough to repair all the damage.

No surprise that you are getting no callback. It's something of a bureaucracy.

Was an insurance company member already assigned?

Check out the website's instructions for filing a claim. Make sure that step has been done properly.

NCJUA / NCIUA (ncjua-nciua.org)

 

[zddoodah]

Our insurance company paid out money but repairs look like they exceed that.

Was the payment made by your insurer a full and final payment? Did you sign something to that effect? Have you notified the claim adjuster about the additional costs?

 

[checko12]

Was the payment made by your insurer a full and final payment? Did you sign something to that effect? Have you notified the claim adjuster about the additional costs?

No we have not signed anything yet. A check was sent to us by our insurance company but was not able to clear due to a endorsement guarantee needing to be provided by our mortgage company.

 

[checko12]

Except for fire, smoke or explosion. The standard HO-4 Liability section excludes:

"Property damage" to property rented to, occupied or used by or in the care of an "insured". This exclusion does not apply to "property damage" caused by fire, smoke or explosion;

Proprietary forms that I have seen contain the same or similar wording.

These tenants lucked out. Yeah, it's tragic but, in this case, their negligence won't drive them into bankruptcy. They probably have no clue yet. I'm sure that the OP has no idea that a tenant's policy covers them for nothing except fire, smoke or explosion.

Thanks for your replies. You're right. This is my first investment property and everything that has happened so far has been overwhelming. To be quite honest with you I do not know what the renters policy covers. Another day has passed and I stll havent heard anything from the adjuster. You mentioned the tenants lucked out. Can you explain please?

 

[army judge]

Please ignore this post.

 

[adjusterjack]

You mentioned the tenants lucked out. Can you explain please?

Lucky because they had liability coverage for this type of negligence and won't have to incur a big debt that might drive them into bankruptcy.

Any other type of negligent damage to your property would not be covered by their policy and owing for the damage would mess them up financially.