Legal Question in Insurance Law in California

commerical rental property fire

I lease a commercial building which had a fire on the rear exterior of the building that burned into the building and the adjacent building. It was durning non-business hours and with no persons present. The landlord's insurance company wants me to reimberse all of $500K+ for damages. There has been no proof of fault or negligence on my part, to my knowledge. I have no liability coverage. Can landlords insur. company sue me for the total amount? Am I legally resposible for resitution?

If I am responsible why doesn't the landlords insur. cover damage if the fire started outside the building during non-work hours.


Asked on 12/08/08, 11:17 pm

1 Answer from Attorneys
Edward Hoffman Law Offices of Edward A. Hoffman

Re: commerical rental property fire

You mistakenly presume that if the fire is covered the insurer must absorb the loss. That's not how it works.

The insurer is required to pay out benefits for a covered loss, but then it is free to sue the person who actually caused (or is otherwise responsible for) the loss in order to recoup its money. It's called subrogation. That's what your landlord's insurer is trying to do.

If you really are responsible for the fire, then you are liable for the costs it imposed on others. Your landlord's premises insurance does not protect you from this liability.

You could have bought liability insurance had you wanted to; depending upon the circumstances, it might have paid this claim for you. The costs of your decision not to buy such insurance should fall on you, not on the people who paid for the damage you caused.

Sorry I can't be more encouraging.

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Answered on 12/09/08, 9:02 pm


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