Renter with no insurance, faulty fire extinguisher?

Question

my friend is being hassled by the insurance company on her rental property. she put something on the stove that caught fire when she left the room. from what i have read, that makes her negligent. however, there was a faulty fire extinguisher. it did not work at all. there was also a possible problem with the electric stove that came with the house. she didn't know it at the time because, first of all, she never used an electric stove before, and secondly, she assumed that the smoking from one of the burners was just food and cleaned it out really good all the time. also, the rental property was actually a home. so when the landlord moved out, she never changed her policy from home-owner's policy to a rental insurance policy. shouldn't that make a difference? my friend has absolutely nothing for them to take anyway except a car that's probably worth about $5K and the damages are $82K. she probably makes about $22K per year and has three kids. what can they possibly do to her?

Answer 1

if your friend has renters insurance, it should include liability coverage, so if she is found negligent, it would cover her up to the limits.  if she does not, the landlords insurance policy will pay the claim and the landlord would then have to sue your friend for reimbursement.  yes the landlord should have changed her policy from a homeowner to a landlord policy once she moved out, but more than likely her company would still cover the loss for her.  as for the fire extinguisher, most companies require there be a WORKING one in a rental, but since the landlords policy was never change, that point is kinda mute now and probably wont make a huge difference.

Answer 2

Thats going to be a tough one. It may end up in a law suit. I dont think the fact that the fire extinguisher did not work will make up for her negligence.

Answer 3

Does it state in her lease that she needs to have renter's insurance?  And who is doing the threatening... the landlord or the insurance company.  If it's the landlord then they're clearly trying to scare her.  If she was supposed to have renter's insurance and she didn't, then it's her fault.  If not, then it's the home-owner's problem.

Answer 4

If it's damage to the house that is in question, it doesn't matter if she was negligent, the homeowner's policy will cover repairing the damage to the dwelling. Renter's policies only cover the renter's personal belongings, not any damage to the home itself.

Answer 5

I deal with this kind of stuff all the time so I'll throw in my two cents worth.

I own a company that represents insurance companies against uninsured renters who damage rental property. The process is called "subrogation."

The bottom line is that your friend is negligent for starting the fire. Trying to say that there was something wrong with the stove now is too late. If she suspected that something was wrong with the stove then she should had the landlord replace it or not use it. I realize to not use your stove is highly inconvenient but with three kids in the house safety is paramount.

Anyway, the possible defective stove and fire extinguisher MIGHT be arguing points for her to try to reduce what she owes, but they are not reasons to get out being legally liable for the damages.

The type of policy that the house owner had makes no change in the fact that your friend is negligent and owes reimbursement.

Your friend just found out the hard way that having renters insurance is the best $10 to $15 per month that any renter can spend.

In most states your friend will owe the Actual Cash Value (ACV) of the damages, not the Replacement Cost (RC). The ACV is the depreciated value of the damaged item just prior to the damage. The RC is the cost to replace the depreciated damaged items with brand new stuff. She needs to ask the insurance company if the 82K is the ACV or RC.

IF the 82K is the RC then depending on the age of the house she will owe less than that. Probably 5 to 15% less. I realize that doesn't make a big difference but any reduction will help.  

Now onto what can they do her.

1. They can ask her to make monthly payments for a very long time.

2. If she refuses to do that they can sue her for the ACV and get a judgment against her if they win. That judgment allows the company to add "reasonable attorney fees" and interest to the original amount and trust me it adds up fast. The judgment will s***w up her credit report and her ability to get a car or house loan in the future.

3. In some, but few, cases the company may be able to garnish wages.

4. They won't take her car that is the last thing an insurance company wants. They prefer money to property.

  

These things can often get ugly. Her options are limited.

A. Set up a payment plan.

B. Check with a bankruptcy attorney to see if filing bankruptcy would get rid of the debt. This is a drastic move but I have seen many people do this on files we have handled in our office.

Good Luck to your friend and please make sure that she gets renters insurance.