Fire damage to leased retail space

[Knucklehead]

What is the name of your state (only U.S. law)? Ohio

My sister had a fire within her leased retail store. It happened in the middle of the night and luckly someone driving by called the fire department before it got totally out of control. The cause of the fire appears to be electrical, but the official cause is "undetermined". Insurance agent is saying that the personal property portion of her BOP is the only coverage she has to cover her actual business/personal property loss (inventory, fixtures, computer, cleanup, etc.) AND to repair the fire and smoke damage to the actual building. Everything I have read about a BOP seems to indicate that in a leased property, where the Tenant does not own the property, damage to the leased building should be covered under the liability section of the policy. If the insurance agent is correct, he wrote a policy with personal property limits that were just enough to cover the actual inventory with no consideration for the cost to repair damage to the actual building. If the fire had gone for 5-10 minutes longer before the fire department was called, I think the whole building would be history. Any advice?

 

[codysmom]

If she is just renting the building she would be responsible for insuring her contents and the building owner should have a policy that covers the building itself unless her lease states that she is responsible for covering the building (triple net lease). If the fire was caused by an electrical issue then the building owners policy should be handling the repairs to the building (providing the owner had a policy on the building). Unless your sister is found to have caused the fire and is found legally liable her policy will not pay to repair the building.

 

[justalayman]

If the fire was caused by an electrical issue then the building owners policy should be handling the repairs to the building (providing the owner had a policy on the building). Unless your sister is found to have caused the fire and is found legally liable her policy will not pay to repair the building.

first, they said officially is was undetermined but as always, the electrical thing always gets blamed

second, just because it (and presuming it was) electrical, that does not mean it was part of the structure that caused the fire. If the tenant plugged in an electrical heater (just as an example) and the cord on the heater ran under a rug and the cord over heated; that would be an electrical fire yet it would fall totally on the tenant for culpability.

 

[codysmom]

first, they said officially is was undetermined but as always, the electrical thing always gets blamed

second, just because it (and presuming it was) electrical, that does not mean it was part of the structure that caused the fire. If the tenant plugged in an electrical heater (just as an example) and the cord on the heater ran under a rug and the cord over heated; that would be an electrical fire yet it would fall totally on the tenant for culpability.

Which would be why I said "if the tenant is found legally liable" as in plugged 20 things in one socket and overloaded it causing the fire.

 

[justalayman]

Which would be why I said "if the tenant is found legally liable" as in plugged 20 things in one socket and overloaded it causing the fire.

plugging 20 things into one socket would not cause a fire if the electrical system were working properly. If the electrical system is working properly, if the 20 things in one socket exceeded the current overload protective (copd)device (breaker or fuse) for that circuit, the overload device would simply trip thereby preventing a fire. That is what a copd does and why they are used. If the 20 things did not exceed the copd limitations, things would simply work as designed.

But, in reality, you said:

If the fire was caused by an electrical issue then the building owners policy should be handling the repairs to the building (providing the owner had a policy on the building). Unless your sister is found to have caused the fire and is found legally liable her policy will not pay to repair the building.

which clearly stated that if it were an electrical fire, it was the LL's liability. Then you went on to say if sis was culpable for the fire, then she would be liable. How you presented it did not imply that sis could be culpable for an electrical fire, only the LL.

 

[Knucklehead]

If the fire department says the cause can not be determined, how do you determine who is legally liable? If there is no proof it was caused by the Tenant, does it automatically default to being the Landlords responsability to have his insurance company pay for the building damage? At this point the Landlord is saying that the Tenant, via the lease, is responsable. An out of state attorney/friend (free advice, but not same state) thinks that could be unenforcable due to the fact that the Tenant could not purchase insurance on a building they don't actually own.

 

[justalayman]

yes, the tenant could have purchased liability insurance. Not sure who told you you couldn't but I can by liability insurance on just about anything in the world. It is purchased to cover your liabilities and has nothing to do with ownership of the property in question.

if the lease states the tenant is liable and you signed the lease, it sounds like you are liable, and apparently out of pocket since it appears you have no liability insurance to cover this.


If you disagree, tell the LL no and let him, or his insurance company if they step in to repair and subrogate the claim against you, sue you and let the courts decide.

 

[Knucklehead]

I meant they as a Tenant they could not purchase property insurance to cover the building they did not own. They do have liability insurance. I don't believe that just because a lease states that you are liable, no matter who is to blame, means it is legally enforcable. I am not saying that this is exactly what the lease states, but the term "fraudulant lease" was brought up in conversations with one attorney.

 

[justalayman]

=Knucklehead;2394982]I meant they as a Tenant they could not purchase property insurance to cover the building they did not own. They do have liability insurance.

liability insurance IS the proper insurance to cover their liabilities in a situation such as this. That covers the purchasers liabilities and in this case, it appears that happens to be the structure that she does not own so yes, you can purchase insurance that effectively covers a building you do not own.

I don't believe that just because a lease states that you are liable, no matter who is to blame, means it is legally enforcable.

well, depending on exactly what it states, you would be wrong.

Obviously it will not be enforceable if the LL burns the place down and it can be proven but absent such situations, yes, a tenant can be made to be legally liable for a building they possess.

I am not saying that this is exactly what the lease states, but the term "fraudulant lease" was brought up in conversations with one attorney.

now you are going off into other realms and possibilities. If you want to go that route, we can spend many hours/days/ even months discussing possibilities that would remove liability but basically, a tenant can be made liable for a building through the lease.