Q: When my tenants moved out leaving the place a mess, I hired a handyman to do some cleaning and repairs. While doing the work, he fell through the floor, which had become spongy with rot. Apparently, the pipes had been leaking for some time, and the tenants never told me.
My helper has medical bills and missed a couple of weeks of work. He has no insurance, and thinks he can be covered by my insurance policy. But it just occurred to me — these tenants had renters’ insurance. Because they caused the problem during their tenancy, aren’t they (and their insurance policy) responsible for the results of their carelessness? –Dan P.
A: One thing for sure you’ll learn from this sad experience: Never hire someone without making sure they have their own insurance. When you hire a firm that has its own employees, you know that the firm must carry workers’ comp insurance, but you should always ask to see the policy, just to make sure. People who work for themselves and have no employees, like your solo handyman, don’t carry workers’ comp, but they should have insurance that will cover work-related injuries.
But for now, your handyman is casting about for a source of compensation, and naturally he’s looking to you. And you, in turn, are looking to pass the responsibility to your tenants. Whether you and/or your tenants are responsible — and whether your policies will cover — depends on understanding the facts, and applying a smidgen of insurance law.
Let’s consider your tenants’ policy. It should have provided liability protection for the tenants’ negligent acts. But, were the tenants negligent? You tell us that the pipes had been leaking for some time, and the tenants had never told you — but did the tenants know about the leak? Does the rental agreement or lease state that the tenant is responsible for the maintenance and condition of the pipes? Is it reasonable to believe that the tenants knew about the leaking pipes and did nothing about it? Did they damage the pipes, resulting in the leak, and choose to ignore it? Or did the pipes silently spring a leak that caused the damage? In sum, did the tenants act or not act as any reasonably prudent person would have done in a similar situation? Unless your handyman can show that the tenants acted negligently, their renters’ policy will likely deny any coverage both for the property damage caused by the leak and for the cost of the handyman’s injuries.
Your own policies for property and liability coverage won’t necessarily step up, either. First, the carrier must conclude that you acted negligently, causing the damage and loss to your handyman. Your conclusion that the pipes had been leaking for some time would seem to suggest that you had not taken proper steps to inspect and maintain your property — which seems to suggest that you were, indeed, negligent. But alas, there’s a catch: It is unlikely that the insurance company will pay for rot caused by water leaking from damaged pipes, because most commercial property insurance policies contain exclusionary wording for loss or damage due to water that leaks or seeps over a period of 14 days or more. The theory is that water that leakage over a period of time is generally a maintenance problem, which is not covered by insurance policies.
However, if you want to help out your handyman, it’s worth your while to submit the entire claim to your insurance carrier, and allow them sort out the best way to respond to the water damage and liability (injury) claims. It’s possible that they will give the handyman a settlement, then go against the tenants (called "subrogation" in insurance lingo) for reimbursement. Whether the tenants are legally obligated to pay, and can refer that claim to their own renters’ insurance company, will depend, as explained above, on whether they acted negligently with respect to the leak. If they weren’t negligent, neither they nor their carrier will have to reimburse your carrier. …CONTINUED