By Robert Griswold, Steven R. Kellman and James McKinley
Saturday, February 23, 2008

Q: I am a tenant, and the owner of my apartment complex recently sent notification to the residents that as a condition of our lease, we are required to have $100,000 in renter's insurance coverage in case of damage to the apartment.

We are also required to include the apartment complex as an additional insured and a vested party for reimbursement should there be any damage.

If we don't follow through, we are told, we will be in violation of the lease.

I live in a one-bedroom apartment and have insurance coverage for far less than the amount required, and it does not include reimbursing the apartment complex for damage.

Is what management is doing legal? Can the complex force me to get extra coverage that I don't need that also includes reimbursing the complex?

I was told that it should have its own insurance to cover loss.

A: Property manager Griswold replies :

Yes, it can make renter's insurance a requirement of your lease as long as it is consistent and applies the policy to all tenants. From the landlord's point of view, the issue isn't whether you have possessions that need $100,000 in insurance coverage but that you or your guests could create a situation in which major damage occurs, such as a fire or flood. That is why the minimum amount is $100,000 and management is insisting that the apartment complex be named as an additional insured under your renter's insurance policy.

The apartment complex probably has its own insurance coverage that has much higher levels of coverage for all types of losses. Its policy could require that all tenants must have renter's insurance. Note that the owner's insurance policy will generally not provide you with insurance protection for loss or damage to your personal property unless it is due to some negligence by the owner. The renter's insurance and the owner's insurance work together to provide more thorough coverage.

Contact your insurance agent and seek to increase the policy limit to $100,000. It should not significantly increase your premium.

I hope you are right that this is coverage you never need, but that is always true with insurance: You hope you never need it, but the peace of mind of having the coverage is worth a lot.

Q: I have been renting a property for four months. I accidentally set my trash can on fire by throwing away some ashes that I thought were out.

Parts of the cabinet were burned. My landlord is insured for such events, but I don't have renter's insurance.

My landlord's insurance company is going to pay for the damage and then demand that I reimburse it. The accident was my mistake, but isn't that what the insurance company is supposed to cover? Am I legally required to pay for damage even though my landlord has insurance?

A: Property manager Griswold replies :

You are responsible, and the owner's insurance company is reasonable to seek reimbursement from you for the expenses it incurs in covering this claim. While every landlord should have insurance, the owner's insurance is not to protect them from situations that are created by their tenants. Insurance for landlords is not like "no-fault" car insurance. The key question is: Who is liable?

If the situation were reversed (as it often is) and something happened (like a fire resulting from a malfunctioning electrical outlet in your rental unit or another unit) and your personal property were destroyed, you would submit a claim to your renter's insurance carrier and it would pay you and then subrogate (seek reimbursement) against the owner's insurance policy because the owner is liable for the cause of the fire.

In this situation, the fact that your negligence in starting the fire was unintentional doesn't change your responsibility.

It has been my experience that many fires are caused accidentally by tenants while cooking or by unintentional tenant negligence through improper use of appliances or extension cords. That is one of the reasons renter's insurance is a good idea and worth the few hundred dollars per year. Negotiate some sort of payment plan with the insurance company, and then immediately check into a renter's insurance policy.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies," and San Diego lawyers Steven R. Kellman, director of the Tenants Legal Center, and James McKinley, principal in a law firm representing landlords. E-mail your questions torgriswold.inman@retodayradio.com. Questions should be brief and cannot be answered individually.

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