In a world where unexpected events can wreak havoc, accidental fires are a powerful reminder of the devastating outcomes that can result from everyday situations.

In short, things happen.

Among the various causes behind these destructive blazes, an often overlooked factor emerges: fires accidentally started by tenants.

According to the National Fire Prevention Association, these unintentional incidents not only pose an immediate danger to lives and property but also have far-reaching impacts that cause billions of dollars' worth of financial losses.

Reasons for Accidental Fire Caused by Tenant

Here are situations that could be the root cause of the fire in your rental property:

  • Cooking mishaps
  • Electrical malfunctioning
  • Improper smoking habits
  • Misuse of heating equipment
  • Negligence with open flames
  • Arson

Suppose the accidental fire damages the structure of the apartment building or any attached structures (such as garages or sheds). In that case, homeowners' insurance can help cover the cost of repairs or rebuilding.

In the absence of such insurance, however, the property owner cannot use the tenant's security deposit to pay for the expenses. Conversely, it's not a reason for the tenant to stop paying rent.

How a Rental Property Fire Affects You and Your Tenants

The landlord may experience extensive property damage due to the fire. The structural elements of the rental home, including walls, roof, flooring, and other components, can be severely affected. The cost of repairs or rebuilding can be substantial, potentially leading to financial strain and lost wages.

On the other hand, tenants may be forced to evacuate the rental home due to the fire, resulting in temporary or long-term displacement. Finding alternative housing can be challenging, especially if there is a shortage of available rentals.

What a Landlord's Insurance Pays For

Landlord insurance typically covers a range of expenses and losses that may occur after a tenant causes a fire in a rental property. The specific coverage can vary depending on the policy terms and limits, but here are some common aspects that insurance companies may pay for after a fire:

  • Repairs for smoke and water damage caused by fire or rebuilding the property
  • Replacement of any personal property like appliances and furnishings
  • Compensation for total loss of rental income
  • Legal fees and medical expenses to cover damages and certain costs to others stemming from the tenant-caused fire

Although your insurance company may cover the above items, many landlords will still be required to pay their landlord's deductible.

For example, if a fire occurs in the rental property and the total damage amounts to $20,000, and the landlord has a deductible of $1,000, they would need to pay the first $1,000 of the repair or replacement costs. The insurance company would cover the remaining amount above the deductible up to the policy's limits.

What landlord or renter's insurance companies may pay for after an accidental fire caused by a tenant

Renters' Insurance

As a landlord, it's important to adhere to the lease terms and collaborate with your property insurance and the renters' insurance to address the expenses of repairing the house. By working in accordance with the lease provisions and coordinating with these insurance policies, you can seek financial assistance to cover damages on the building or property.

What Landlords Should Do after an Accidental Fire

If a tenant causes fire damage and the property is not completely destroyed, landlords should take several important steps to address the situation effectively.

Check Your Tenants and Secure Property

Prioritize the safety of all individuals involved and immediately contact emergency services, such as the fire department, to extinguish the fire and mitigate further damage. Evacuate the property if necessary.

Document the Rental Property Fire Damage

Once it's safe, document the extent of the fire damage thoroughly. Take photographs or videos of the affected areas inside and outside the rental property. This documentation will be crucial for insurance claims and potential legal purposes when addressing the rental property fire.

A fire department’s report is typically generated after the fire department responds to a fire incident. It provides an official record of the incident and can be valuable for insurance claims, legal proceedings, and understanding the cause and extent of the fire.

Once you receive this report from the fire department, carefully review its contents. It typically includes details about where the fire started, the extent of the damage, actions taken by the local fire department, and any other relevant observations or findings. Pay close attention to the section regarding the cause of the fire, as this information may be crucial for insurance purposes or legal proceedings.

Notify the Insurance Company

Both the landlord and tenant should promptly contact their insurance companies to report the incident. These may include your property owners' insurance and renters' insurance. Provide them with all the necessary details, including the cause of the fire and the extent of the damage. Follow their instructions for filing a claim and provide any requested documentation or evidence.

Assess the Fire Damage

Engage professionals, such as contractors or fire restoration companies, to assess the extent of the damage and provide repair estimates. Obtain multiple quotes if needed. This assessment will help determine the scope of repairs required to restore the property to a habitable condition.

Communicate with the Tenant Who Caused the Fire

Inform the tenant found responsible for the fire incident and discuss the consequences of their actions. Document any conversations or correspondence with the tenant regarding the incident as part of your own investigation. Depending on the circumstances, you may need to determine liability insurance, potential legal consequences, and financial responsibilities.

Insurance policies typically cover the costs of fire damage in a rental home. The specific coverage and responsibility for covering these costs depend on the rental insurance coverage stipulated in the insurance policies held by both the landlord and the tenant.

Work with Your Tenant's Rental Insurance Company

The renter's policy may cover damage to the tenant's personal belongings, such as furniture, clothing, electronics, and other possessions. Additionally, the renters' insurance policy may provide coverage for damages caused to the rental property or injuries to others resulting from the fire.

Review Lease Terms

Refer to your rental agreement to understand the lease terms and conditions related to tenant-caused damages and liability. It may outline how a tenant is responsible for damages caused by their actions and guide how to proceed.

If the tenant's actions resulted in significant damage or violations of rental agreements, consult legal professionals to understand your rights and potential legal remedies.

Repair and Restore the Property

As a landlord, you must address your tenant's inconvenience during this difficult period.

Once insurance claims have been initiated and necessary approvals obtained, proceed with the repairs and restoration of the property. The landlord's repair efforts include coordinating with contractors and obtaining required permits. They should also ensure that the repairs are done professionally and comply with local building codes and regulations.

Help Tenants Find New Housing

If the rental property is temporarily uninhabitable, property owners assist all affected tenants in finding suitable temporary housing if necessary. This could involve providing a list of nearby hotels, extended-stay accommodations, or short-term rental options. Explore local resources, such as emergency housing services or community organizations that can assist tenants in need.

Consider modifying lease provisions to accommodate the tenant's transition to new housing depending on the circumstances. This could involve temporarily suspending rental payments until the tenant can return to the repaired property or negotiating a new rental agreement for a different rental property if the original one is permanently uninhabitable.

Initially, the landlord pays for relocating tenants upfront but is later reimbursed by the insurance company once the claim process is completed.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!