Q: I am a tenant in a condominium, and one of my guests started a fire that caused extensive damage to portions of the property maintained by the condo association. I agreed to be responsible for my conduct and the conduct of my invitees.
The association maintains a master policy that covers damage to the building in the event of a fire. The master policy names each unit owner as an additional insured and waives rights of subrogation by the insurer against unit owners as well as their respective tenants.
I am concerned that I may be exposed to a subrogation claim by the insurance company — what can you tell me?
A: Number one, I would hope that you obtained your own renter’s insurance to protect you during the course of your rental agreement. Too often, renters do not appreciate the risk they take on when they rent without insurance. And boards of directors of community associations are well-advised to ensure that their governing documents include a requirement that renters purchase such insurance, in addition to the requirement that each individual owner must insure their unit or home.
If the governing documents do not include those requirements, the board of directors should pursue a vote on amending the governing documents to include same.
In a recent case in Virginia, the insurance policy expressly provided that only the association and the individual unit owners were the named and additional insureds covered by the policy. The court said that although the insurer waived its rights to recover from them, the waiver made no mention of tenants or other non-owner occupants.
In that case, since the tenant was neither an individual unit owner nor a member of the association covered by the subrogation waiver, the insurance company was able to proceed against the tenant.
So, it is imperative that you notify your insurance company as soon as possible or otherwise check the scope of the insurance policy of the association regarding a waiver of subrogation.