When the tenant must pay your insurance deductible

A tenant in my upper flat recently ran water in the sink for over an hour, flooding the lower flat. The tenant has no renter’s insurance; can I charge him my $1,000.00 insurance deductible?

Yes, you can charge the tenant for the deductible, but collecting that money is the real issue. You can always file a small claims action for any money you pay to repair damages caused by your tenant, but we recommend that you simply deduct it from the tenant’s security deposit. You have already “collected” the money, and you will not have to compete with your insurance carrier’s subrogation claim against the tenant (see below). The deposit can be used to “repair damages, exclusive of ordinary wear and tear, caused by the tenant or his guest(s).” Civil Code §1950.5. This would include payment of your $1,000.00 insurance deductible, which was used to repair the damages caused by the tenant. You might have to wait until the tenant vacates to deduct the $1,000.00 from the deposit, which leaves you with less recourse should there be unpaid rent later, or if you discover more damages after the tenant leaves. However, a well-written lease, like the PPMA Lease, has a provision that allows the landlord to deduct money from the security deposit to make repairs prior to the tenant vacating the unit, and requires the tenant to replenish any used portions of the security deposit.

Typically after all repairs have been made, insurance carriers seek subrogation (or repayment) from the responsible tenant of the money the carrier spent on the repairs. The tenant will therefore be facing collection efforts, and possibly a lawsuit, for this large sum of money. Chances are he will likely ignore any separate claim you bring for the $1,000.00 deductible.

Note, although you cannot force a tenant to carry renter’s insurance, you should make sure to place a provision your leases warning tenants that they will be liable for any injuries or damages they cause; the PPMA lease contains such a provision.

By Sally Morin and James M. Millar of Millar & Associates (415)981-8100.