How to Handle Water Damage Caused by Tenant?

Question

Details:2nd floor tenant steam boiler was not heating his apartment, so instead of calling us to fix it, he turned a water valve that proceeded to send a massive amount of water into the radiator system, sending water all the way up to his radiators on the second floor and the water was shooting everywhere and also flooding through the ceiling into the 1st floor unit. The 2nd floor is hardwood floors, the 1st floor has blue board ceilings covering up horse plaster ceilings. Tenant turned off water relatively quickly and our plumber/HVAC guy arrived and got everything under control from a systems perspective. The first floor had water pouring down some walls, but by the end of it, there was no discernable staining or warping or bubbling of the ceilings (as of now, writing this post a few hours after this happened). The apartment is in the northeast and its relatively cold right now so thats probably a plus from a mold/mildew perspective.At this point in time there is no noticeable water damage to the ceilings or walls, but the question is what is lying behind what the eye can see? How extensive is this damage and over what time frame will it show itself? Our current plan is to buy some air circulators and point them at some of the spots where water flow was visible, but other than that we do not know what to do. Questions:Should I call our insurance company to let them know about the incident even though currently we have no claim to make?Should I call the tenants renters insurance companies to see what they cover in case we need to do any work? Would the 2nd floor tenant policy be responsible for the housing costs of the 1st floor tenant? Should we call a water damage remediation company? I am always skeptical about calling contractors for these kinds of things because incentives are just not aligned at all. They might call for a lot more work than what is necessary. My partner and I are willing to do our own work. Should we be investing in moisture meters and other things? Should we try to do our own remediation work? If so, what is the strategy/game plan?Are there any questions I am not thinking of?

John Warren · Answer

@Jonathan Leake you should be in good shape here from your description. Plaster is very sturdy, and it sounds like things were wet only for a very limited amount of time. If you see no signs of moisture damage, then I definitely wouldn't call your insurance company. What I would do is reach out to your tenant's insurance to make sure they are aware of things. This wont' cost you anything as you investigate. Is there a basement where the water was able to run too? If you saw a lot of water go to the basement and into a floor drain then you are likely in the clear here.

Bo Bond · Answer

Jonathan,This could have been really bad. Glad to hear it wasn't worse. In this situation, 99.9% of the time, your property policy will respond to the damages (if you choose to file a claim instead of fixing everything on your own). The reason for this is because your policy is the policy that protects the items damaged (flooring, walls, sheetrock, insulation, studs, trim, etc.). The tenant only has renters insurance, and thus their policy only protects their personal belongings.Many owners may say, "but the tenant was liable/negligent here", and this is true. However, waiting for a liability claim to pay out for negligence can take months or even years to hash out in a court of law. That means your home stays damaged until a resolution is reached in court/mediation. So how is this type of damage "typically" handled when insurance is involved?In short, the owner/investor's property policy would pay out for the damages. If the loss is large enough, then the owner/investor's insurance company "MAY" subrogate against the tenant's general liability policy once everything has been fully repaired/replaced with like kind and quality. However, this is completely up to that carrier and not you as the owner. Once you've filed the claim, the carrier has the right to determine their actions on that claim going forward. Depending on your local/state laws, your carrier may "not" be able to subrogate against the tenant's GL policy. There may also be exclusions within the tenant's general liability policy that keeps their policy from responding at all. I'm not sure if you can assess your property deductible back against a tenant or not, but it would certainly be worth looking into with an attorney. If it is possible to do this, then I would have to believe this would need to be in your lease agreement somewhere.I hope this helps and at least sparks other comments and help from others on BP! Good luck, and hope all goes well.