Insurance denial at SF condo

[Erika Mov]

A December 2020 fire caused by a condo next door caused damage to the exterior and interior of our unit, and complex (3 units).

Our homeowner policy through nationwide rejected our claim (4 months after approving the repairs) citing that we did not have the short term rental insurance policy , and commercial exposure isn’t covered Bc we had a tenant with a 4.5 month lease. 

Prior to moving out of this property which was our primary residence,  we reached out to our insurance broker - told him about the 4.5 month renter, and he said we didn’t have to change our policy. Our intent was to move back in January 2021, but due to covid rates in SF we decided to lease out the property long term and signed a lease with long term tenants through 2022. 

Currently, repair costs to the inside of our unit and deck are around $45k, including loss of rental income. Our HOA's insurance has paid for the claim for the exterior of our unit.

Tenant who caused the fire - didn’t have renters insurance. The insurance of the landlord of that building denied responsibility.

After our homeowner policy denied our claim, we're not sure what to do next.