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Tenant caused damage and lawsuit

Discussion in 'Other Residential Landlord & Tenant Issues' started by Tony Jefferson, Jan 10, 2019.

  1. Tony Jefferson

    Tony Jefferson Law Topic Starter New Member

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    Jurisdiction:
    New Jersey
    We own an apartment and our tenant backed up the toilet (he tried to flush paper towels) and caused the unit to flood. This flood then leaked into the unit below us and that owner had almost $16,000 worth of damage. Our insurance policy on the our unit did not cover liability and thus wouldn’t cover our tenant and the water damage. Our tenant didn’t have coverage either. The owner with the damage filed a claim with her insurance company and now the insurance company through a law firm is coming after us for the full amount.

    How do we fight this?

    There are some strange points to this as well. The insurance company did a quote and it came to about $16k for all repairs to be completed. The insurance company told the owner they wouldn’t only cover a certain amount (I believe 10k). She told us was able to have it all completed for less by cutting corners with the flooring company. Why is the insurance company coming after us for more than what they covered?
     
  2. adjusterjack

    adjusterjack Super Moderator

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    Are you saying that you had no liability coverage or that your insurance company denied the claim because you weren't negligent in causing the damage?

    There is a critically important distinction there.

    What kind of policy did you have on the unit?

    Don't "think" you know. Take out the policy and read it. Tell me what it says. Look for a Section I - Property and a Section II Liability. Should be easy to determine if you have both or just one.

    If you have liability insurance you turn the correspondence over to your insurance company and let them handle it.

    If you don't have liability insurance you deny the claim based on there being no negligence on your part. If you get sued you hire a lawyer to defend you.

    Because it's likely what they paid to their insured. Don't rely on anything you heard or were told. Get a copy of the insurance company settlement papers showing what was paid. It's possible that the downstairs neighbor pocketed some of the settlement money. But that has nothing to do with what her insurance company is seeking from you. It's also possible that the insured was paid the ACV of the loss with a potential additional payment after the repairs were completed. You won't have any way of knowing until you get the detailed repair cost and payment information from the insurance company.

    Whatever the insurance company paid plus her deductible is what her insurance company should be coming after.
     
  3. zddoodah

    zddoodah Well-Known Member

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    Say what?! Didn't "cover liability" at all or your insurer determined you had no legal liability and, therefore, declined to pay the neighbor's claim? As mentioned in the prior response, the distinction is hugely significant.

    Assuming you had liability coverage, you turn this over to your insurance carrier. If you didn't have liability coverage, you should retain legal counsel to explain to the neighbor's insurer's lawyer that you have no liability because the damage did not result in any intentional or negligent act by you.

    How could we possibly know?
     
  4. Tony Jefferson

    Tony Jefferson Law Topic Starter New Member

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    Sorry that I was not clear about the liability coverage. The policy only covers possessions and interior walls only. (Basic insurance the mortgage company demanded and sought out for us as our sale of the condo fell through when we bought our new house). Never thought to add more coverage.

    The insurance company already has denied to cover the other owners repairs because of obviously it’s not on our policy. Is it worth bringing it back to our insurance company as now the other company is looking for payment? Or is it just going to be same thing, no coverage due to no liability coverage on plan.

    As for who’s responsible: legally were we the owners responsible or our tenants?

    Thank you for confirming things for me.
     
  5. army judge

    army judge Super Moderator

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    I suggest you discuss this with your attorney.

    Your issue is far too complex for messages on an internet forum.

    I wish you well.
     
  6. Tony Jefferson

    Tony Jefferson Law Topic Starter New Member

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    The policy has no liability coverage thus they would not cover the damage to the neighbor.

    When you say “that you have no liability because the damage did not result in any intentional or negligent act by you”, are you trying to say that my tenant was the negligent person at fault? Or that there was no intentional or negligent act by any party?
     
  7. zddoodah

    zddoodah Well-Known Member

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    It's pretty cut and dry. You told us that your "tenant backed up the toilet" because "he tried to flush paper towels," which "caused the unit to flood." That's either an intentional act or negligence on the part of the tenant.

    P.S. Obtain a policy that includes liability coverage and, if you are going to continue to rent out the place, insist that your tenant obtain renter's insurance with liability coverage that names you as an additional insured.
     
  8. adjusterjack

    adjusterjack Super Moderator

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    In other words, the mortgage company bought insurance to cover their own lienholder interest in the property and you did not buy any insurance of your own.

    That explains it.

    It'll be the same thing. You have no liability coverage so you are on your own to defend against the claim.

    The negligence of your tenants caused the damage. You had nothing to do with it.

    Exactly.

    But that doesn't prevent you from having to deal with defending the claim nor does it prevent you from getting sued and incurring defense costs.

    I suggest you get a lawyer of your own to respond, in writing, to the demand from the insurance company's lawyer. It'll be worth paying a few hundred to get it done because you won't have a clue as to how to word it without writing something that can be used against you.
     

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