The insured bought a house in Oregon and took out insurance under a 2011 ISO HO3. He lived there for a month, but then moved back to California and started renting out the Oregon house to a local couple. Six months later, the couple disappeared with no trace and the house had been trashed. Walls were dirty; carpet was dirty; graffiti in the bathroom, hole in the bedroom wall; bottles and cans everywhere; dog urine. The insured wanted his homeowners insurer to pay for a full Coverage A cleanup and restoration.
Notable Timestamps
[ 00:16 ] – The homeowner rented out his house, then returned to significant damages from absentee renters and is seeking coverage for cleanup and restoration.
[ 01:15 ] – The real question is, what happened to the tenants? Could it be… aliens? No.
[ 02:57 ] – If the homeowner wasn’t renting at the time of the insurance application, there was no misrepresentation.
[ 04:05 ] – If the insured didn’t reside there, is the house the “residence premises?” It’s disputed among the courts, but not an issue in Oregon.
[ 05:20 ] – Landlords should expect normal wear and tear which is not covered, but vandalism is covered.
[ 08:32 ] – Dog urine may be considered a pollutant which is excluded, but if it’s vandalism, that’s a Coverage C Peril and likely covered regardless.
[ 09:39 ] – What about questionable fashion choices, a tenant painting a wall red, or rainbow-colored? If it affects market value and ability to rent it, that could be a direct physical loss.
[ 11:30 ] – Vandalism is a Coverage C Peril, but excluded under Coverage A if the home has been vacant more than 60 days.
[ 12:15 ] – Which state law applies? In this case, the home was in Oregon, so even if the insured was living in California, it’s likely Oregon law will apply.
[ 13:24 ] – Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Coverage Question – Tenant Damage Can Rise to the Level of Vandalism/Malicious Mischief – https://search.plrb.org/?dn=87158 (https://search.plrb.org/?dn=87158)
Q&A – Damage By Tenants – https://search.plrb.org/?dn=38442 (https://search.plrb.org/?dn=38442)
Coverage Question – Tenant Hoarders: Vandalism or Wear and Tear? – https://search.plrb.org/?dn=87102&src=gsa (https://search.plrb.org/?dn=87102&src=gsa)
For more on the vandalism exclusion, see: https://www.plrb.org/documents/vandalism-vacancy-ho126/
Employees of member companies also have access to a searchable legal database, hundreds of hours of video trainings, building code materials, weather data, and even the ability to have your coverage questions answered by our team of attorneys (https://www.plrb.org/container.cfm?conlink=sec/cq/default.cfm) at no additional charge to you or your company.
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