Property damage between tenants and landlords is messy.
One party points fingers at the other. The insurance company stalls. And someone winds up paying for someone else’s damage. A broken pipe, a kitchen grease fire, a guest slipping on water. No one is sure who’s liable.
Here is the thing…
Nine times out of ten it boils down to an insurance claim short-pay. The insurance company only pays a portion of the damage, the tenant and landlord fighting over the difference.
Here’s what’s covered:
- Why Property Damage Liability Gets Confusing
- What Landlords Are Responsible For
- What Tenants Are Responsible For
- The Underpaid Insurance Claim Problem
- How To Protect Yourself On Both Sides
Why Property Damage Liability Gets Confusing
Most tenants believe the landlord has sufficient insurance. Most landlords count on the tenants renters policy to fill in the gaps.
Both are wrong.
A landlord policy covers the building (walls, roof, structure). A tenant policy covers their personal property and personal liability. Right in between is a hole where neither policy completely backs up and that hole is where 99% of claims reside.
Things become even uglier when an insurer short pays your claim. Short paying is approximately five to ten percent more prevalent than outright wrongful denial of a claim — which means the larger issue is not denial, it’s lowballing.
If the payout falls short of the damage, someone is left to foot the bill. Oftentimes, that someone is you. By consulting a trusted property damage attorney early, you can avoid out-of-pocket expenses on an insurance claim that was lowballed.
What Landlords Are Responsible For
Landlords carry the heavier load when it comes to the structure. That includes:
- The building itself — walls, roof, foundation, plumbing, electrical
- Common areas — hallways, stairwells, shared laundry rooms
- Appliances they own — the fridge, stove, dishwasher
- Major systems — HVAC, water heater, sewer lines
If a pipe bursts and floods the unit …. landlord problem. If the roof leaks …. landlord problem. Renting puts insurance companies at higher risk so landlord insurance costs 15% to 25% more on average than homeowners insurance would for the same unit.
But here’s where it gets tricky…
Landlords can also be held responsible for injuries sustained on their property. Say, a tenant friend trips on a cracked stair the landlord failed to repair knowing about it — landlord gets the liability. Negligence changes liability quickly.
What Tenants Are Responsible For
Tenants are responsible for two things: their own belongings and damage they cause.
The landlord’s policy doesn’t insure the tenants furniture, electronics, clothes, or anything else they own. Therefore if a fire occurs and they don’t have renters insurance… they sure do not get to keep anything!
This is huge. Nationwide only about 55 percent of renters have renters insurance. So almost half of renting households are doing this. They are betting everything they own.
Tenants are also liable for damage they cause through negligence. That includes:
- Water damage from an overflowing tub or leaking aquarium
- Fire damage from a stove left on or candles knocked over
- Damage from pets that chew, scratch, or stain
- Damage from guests they invited into the unit
A typical renters policy will provide liability coverage for these incidents — up to the policy limit. What happens if damages exceed the limit? The tenant is personally responsible. And the landlord can sue you for the difference.
The Underpaid Insurance Claim Problem
Now here is the part nobody talks about…
Insurers shortchange you even when you have documentation and your policy clearly covers the damage. They use depreciation, ambiguous policy wording and low repair estimates to withhold thousands from your claim.
The stats show it. Average claim severity reached $18,311 in 2022, the highest level in five years. And with repair costs continuing to escalate, the insured loss versus repair cost gap continues to widen.
Here’s why it matters:
When landlords’ claims are underpaid they usually try to recoup the shortfall from the tenant — even if the tenant wasn’t responsible for damages. When tenants’ claims are underpaid they are forced to out-of-pocket expenses to replace belongings and continue paying rent on a damaged unit.
Either way, somebody loses.
Insurance companies understand that the majority of people will not stand up for themselves. They rely on it. This is why they continue doing it — the insured party typically takes whatever is written on the cheque.
Don’t be that person.
How To Protect Yourself On Both Sides
Tenant or landlord, the steps are pretty similar.
Document Everything
Photograph or video the condition of the premises on move-in day. Renters should inventory their possessions with photos. Owners should inventory the rental unit with dated photos. Save maintenance reports, repair requests and any written correspondence.
If things go south, this is what separates fair compensation from a nickel-and-dimed claim.
Know What Your Policy Covers
Two thirds of homeowners don’t know what their policy covers. Policyholders (Tenants anyone?) are even worse off. Read your policy. Then read it again. Look for:
- Coverage limits
- Deductibles
- Exclusions (especially flood and earthquake)
- Replacement cost vs. actual cash value
Boring work. Do it.
Don’t Accept The First Offer
When you get the first offer from your insurance company, consider it a starting point …. not a firm number. Obtain estimates from contractors. Compare them to the insurer’s offer. If there is a large discrepancy, negotiate.
If the insurer refuses, bring in legal help.
Maintain Open Communication
Most conflicts worsen due to lack of communication. The tenant doesn’t notify the landlord of a minor leak. It becomes a flooded apartment. The landlord doesn’t notify the tenant of upcoming maintenance. He thinks the landlord sprung it on him.
Talk to each other. Put it in writing. It saves time, money, and lawyers.
Final Thoughts
Property damage liability is simple if you think about it. The landlord covers the building. Tenants cover possessions and damages they create. Insurance covers the rest.
The problem is when insurance doesn’t do its job.
Underpaying claims, depreciation schemes and slow-walking adjusters have very real financial consequences for everyone involved. Your best defense is understanding your limits of liability, being properly insured and speaking up when an insurance company shortchanges you.
To recap:
- Landlords cover the building, common areas, and major systems
- Tenants cover their belongings and damage they cause
- Insurance fills the gap — only if it pays what it owes
- Document everything before, during, and after damage
- Don’t accept lowball settlement offers without a fight
View your insurance policy as if it were a contract – because it is. If the insurer is in breach, make them pay.
