Residential Lease. Illinois has until recently avoided per se rules with regard to the "Sutton Rule" (see Oklahoma) and taken a more flexible case-by-case approach, holding that a tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. Dix Mut. Ins. Co. v. LaFramboise, 597 N.E.2d 622, 625 (Ill. 1992). Dix was a case involving a residential
lease. The Supreme Court said that although a tenant is generally liable for fire damage caused to the leased premises by his negligence, if the parties intended to exculpate the tenant from the negligently caused fire damage, their intent - as expressed in the lease agreement - will be enforced. To make this determination, the lease must be interpreted as a whole so as to give effect to the intent of the parties. Stein v. Yarnall-Todd Chevrolet, Inc., 241 N.E.2d 439 (Ill. 1968). In Dix, the residential lease did not contain a provision expressly apportioning fault in the case of a negligently caused fire, so the Court construed the lease as a whole and concluded that it did not reflect any intent that the tenant would be responsible for fire damage. Absent any such intent, the tenant is considered a co-insured with the landlord by virtue of having paid rent which contributed to the insurance premiums, and the subrogated insurer could not sue its own insured for subrogation.
The rule, therefore, appears to be that a tenant will be an implied co-insured and cannot be sued by the landlord’s subrogee for fire or other damage unless a contrary intent can be gleaned from the four corners of the lease itself. Auto Owners Ins. Co. a/s/o John Ellis v. Thomas Callaghan, 952 N.E.2d 119 (Ill. App. 2011). Where a lease reflects the parties’ intent to place the responsibility for water damage on the tenants, they will not be considered implied co-insureds. Pekin Ins. Co. v. Murphy, 2014 WL 6092187 (Ill. App. 2014).
Oral Lease. The same outcome results from an oral lease which contains only basic terms such as rent and duration of the lease. Cincinnati Ins. Co. v. DuPlessis, 848 N.E.2d 220 (Ill. App. 2006).