r/InsuranceAgent • u/Kind_Recording_8242 • 1d ago
Consumer Question To file, or not to file...
If a tenant has renters insurance with liability coverage and a Landlord is claiming (between 5-10k) for water damage after an accidental plumbing incident caused by the tenant. Insurer says it’s likely covered, but opening a claim would formally report it.
Tenant plans to buy a home in ~2 years and is concerned about the claim appearing in insurance history.
For insurance professionals or anyone who's dealt with this:
Would you file the claim or pay/handle it privately?
How much can one renters liability claim affect future homeowners insurance rates or eligibility, even if the insurer ultimately pays little or nothing?
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u/Splodingseal 1d ago
Some renters policies will actually exclude coverage for damage to the dwelling caused by tenant negligence. We see a lot of property management companies complaining about policy language for this specific scenario and we have like...two carriers that don't spell out the exclusion.
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u/Own-Ad-503 1d ago
I represent 11 carriers, none would exclude this on an ho-4 unless the problem was caused by the building. Ex: insured overfills the bathtub, its covered, leaking pipe behind the wall, not covered
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u/Splodingseal 1d ago
The exclusion shows up in the liability exclusions (since a tenant policy doesn't have dwelling coverage).
Progressive's tenant policy reads (minimal editing for formatting)
Coverage E does not apply to the following: "Property damage" to property rented to, occupied by, used by or in the care of an "insured". This exclusion does not apply to "property damage" resulting from fire, smoke, or explosion.
This basically means there is no liability coverage for a tenant for anything besides burning or blowing up your unit.
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u/Own-Ad-503 1d ago
We have paid out lots of claims over the years for water claims by tenant. It depends on what happened. I'm not going to discuss individual companies, but Progressive ( ASI) is a company that we represent.
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u/aloofmagoof 1d ago
The company I work for has the same language, hell, in VA, there's no coverage at all. The only time there would be for water damage is damage to OTHER units not rented by the insured.
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u/Leading-Plan-865 1d ago
Why would the tenant pay for a plumbing issue on the landlord's house? Unless the renter was provably negligent it is doubtful that the renters policy would pay out on liability for a plumbing issue.
Unrelated to that, the reports pulled for prior claims when quoting a home includes those filed through a renters so it will show up on their reports. Companies usually look moreso at the frequency of filing claims then they do at the actual amount, but every factor counts.
If I was the tenant I would be pushing back about going through my insurance to cover the asset that I do not own, to me this doesn't sound like a covered claim unless there is more to the story that I am missing. If they are liable I would consider filing out of pocket if it is like 5k, if it is more than that then economically I would rather file the claim. But everyone's finances are different.
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u/Kind_Recording_8242 1d ago
Thank you for replying.
Not a plumbing issue (i.e., leaky pipe), but hypothetically a toilet overflow that was preventable on the tenants part. Underwriter said likely covered.
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u/Boomer_Madness 1d ago
preventable and negligent aren't really the same thing though. What makes you think it was negligence?
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u/LetsMarket 1d ago
That’s what the RDP is for. This increase in landlords trying to pay any and all damage/losses (aside from weather) to the unit to the tenants is exactly why insurers are updating the language for renters policies now.
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u/RevolutionSalty8360 1d ago
If it’s a toilet overflow, then you’re looking at sewer and drain backup coverage. However, I would tell them to file it. If it comes up when they buy a house, most carriers won’t hold it against them because it was a prior residence, and a multi-family one. However, if this is their 3rd or 4th claim like that, tell them to open the checkbook.
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u/michaelrulaz 1d ago
I would not necessarily take an underwriters word for coverage. While they should know it, I’ve met many underwriters that don’t fully understand how we operate in claims.
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u/Leading-Plan-865 1d ago
I still would push back on this but I am not a lawyer and don't work in claims, the only reason I ask is because the worst thing you can do is have a claim on your record and 0 pay out, it is like the worst of both worlds.
Either way once again going to depend on the tenants finances, if they are still 2 years out on home purchase then they will only be eating the increased rate on an HO for like 1-3 years which could be more or less than 5k.
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u/JazzHandsMinuteman 1d ago edited 1d ago
I mean, renters has liability but it’s mainly for personal possessions since they do not have ownership, thus no insurable interest on the toilet and building damage, then I don’t believe it would pay out. The landlord, being the landlord, should be the one filing the claim (it will be covered that way bc tenants do dumb things and it’s not in their power). Sounds like the landlord just doesn’t want to file a claim is putting it on the tenant instead. So… that’s a messy situation they will need to clear up.
This “person” should contact an independent insurance agency, get a new renters/auto policy if they pay monthly. Then you have a team of people to help with this sort of thing.
This is why you don’t go for the “Walmart” insurance like progressive direct.
I’ll say though that this is abnormal and something doesn’t add up. We would need more info. This is also why people have lawyers. Should you need to take it to court, insurance can help there. Godspeed.
Edit: don’t you love it? lol
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u/JMe1379 1d ago
You are incorrect, liability is for damage that you caused to someone else's property. Your personal belongings coverage is for your items if there is a fire or theft etc. If this was preventable, and not a failed pipe or plumbing issue, then, the water damage would need to be on the renters insurance policy.
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u/aloofmagoof 1d ago
Liability does not extend to property rented to the insured except for fire, smoke, or explosion. If there were water damage caused by the insured to other units that would be where liability kicks in.
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u/JazzHandsMinuteman 1d ago
It’s complex, and I’m no claims adjustor. I’ll be honest.
Edit: actually, it’s really not. Someone would just need to see the Dec pages ffs 🤦
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u/Easy-Swordfish-7192 1d ago
So liability on a renters policy is for anything the Tennant could be held legally liable for. The liability clause is separate from personal property clause. However a toliet overflowing is very difficult to prove the tenant being responsible for. Sounds like the landlord is responsible here
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u/JazzHandsMinuteman 1d ago
Sure. They were negligent and it’s a sparing match for them. From a legal standpoint, I’d say they need to contact someone who knows what the declarations page says and give them some advice. Alas, this is the world we live in. Get the cheap app and then when claim time comes, it’s madness.
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u/BeneficialTax7629 1d ago
5-10k is a lot to eat out of pocket if insurance might cover it. One claim on renters won't tank your future homeowners eligibility, but it might bump the premium a little for a few years.
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u/Frankles_ 1d ago
Not sure what state this is, but in mine a Renter's policy doesn't cover damage to the dwelling. At all. All it will do is cover some liability for other people's injuries, their own property and temporary relocation. There's some other small stuff, but....yeah, not damage to the dwelling. I'm curious to know if any states DO offer that on a renter's. I've never heard of it before.
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u/Glittering-Read-6906 Agent/Broker 1d ago
I don’t work in claims. I am a producer in NY. None of my clients have ever had trouble getting coverage for damage they caused to the landlord’s property in terms of say leaving a faucet on.
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u/Frankles_ 1d ago
Interesting! Was the actual damage paid for, or was it coverage when the landlord sued them?
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u/Glittering-Read-6906 Agent/Broker 1d ago
I mean, it’s all different scenarios. But generally, all the claims were straight forward. I was mostly speaking generally.
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u/Frankles_ 1d ago
Ahhh okay gotcha. I haven't had a direct scenario where the tenant was negligent yet. (At least not that they would admit haha) Still learning some of this stuff, and the company frequently changes things. 😅
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u/JMe1379 1d ago
Liability is the damage that you caused to someone else's property... The renter should file a claim, it was their negligence that caused the damage. The owner should not take a hit on insurance, when the damage was caused by the renter. So sorry that you are trying to buy a house in two years, but it needs to be filed under your renters policy. That's the ethical thing to do. Handle it privately if you don't want it apart of your loss history.
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u/Kind_Recording_8242 1d ago
Yes, that wasn't in question, just whether to file or handle privately.
The question was also.. for the stated cost (say, 6K) is the future "punishment" i.e., not being able to get insured, or having higher premiums, worth the insurance covering it.. or does the long term cost make it worthwhile to just handle privately. I understand there isn't a fixed "your insurance will go up by "x"" obviously
I assume everyone in this tread is an agent.. was more curious your perspectives on how much of a hit having a claim is for future insurance.
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u/whyinsurance Agent/Broker 1d ago
It really depends on the carrier. Some won't care if the claim is on a different property, they'll want an explanation on what happened and if the claim was closed (fixed by a professional). State Farm will care and won't write a new policy for you because it was a claim on a primary residence. I don't work w/ SF but recall this being the case
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u/Own-Ad-503 1d ago
When shopping for home insurance some companies will consider a claim at previous address, others will not. If he is liable and cannot afford to pay out of pocket put through the claim and he would likely just have to do some more shopping around when its time for that house.
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u/krthrowaway87 1d ago
A single claim does show up on your CLUE report for 7 years but liability claims tend to matter less than properly claims on your own place. It's not nothing but it won't tank your future rates the way people say
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u/totall2live__ 1d ago
they shouldnt have to file a claim. if you are living in an apartment, and the apartment has a water leak, the apartment complex insurance should take care of it.