South-Western Legal Studies in Business

Landlord's Insurer May Not File Subrogation Claim Against Tenant's Insurer without Agreement in Lease
Description Maine high court held that when a landlord's liability insurance policy pays for damage suffered in a fire in a tenant's apartment, there is no right of subrogation against the tenant's insurer unless the lease specifies such a requirement.
Topic Insurance
Key Words Tenants; Subrogation
C A S E   S U M M A R Y
Facts The Snyders rented an apartment in Maine. They obtained a policy that covered their personal property and provided $300,000 in liability protection. The owner of the apartment had a liability policy issued by North River Insurance. The Snyder's babysitter accidentally started a fire while smoking. The fire did $230,000 damage. North River paid the apartment building owner for the fire damage then filed a subrogation claim against the Snyders. The federal district court certified this question to the Maine high court: "May a residential tenant be liable in subrogation to the insurer of a landlord for damages paid as a result of fire, absent an express agreement to the contrary in a written lease?"

The answer: "No, a residential tenant may not be held liable in subrogation to the insurer or the landlord for damages paid as a result of a fire, absent an agreement to the contrary - that is, absent an express agreement in the written lease that the tenant is liable in subrogation for fire damage to the apartment complex." Hence, the landlord's insurer may not proceed against the tenant's insurer.

Citation North River Ins. Co. v. Snyder, 804 A.2d 399 (Sup. Jud. Ct., Maine, 2002)

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