A number of property damage subrogation cases involve pursuit by a property owner’s insurer of a negligent tenant. Once liability is determined, the first part of the legal analysis is to determine application of the Implied Co-Insurance Doctrine. In review of the policy and lease agreement, we determine if the tenant is covered under the property owner’s insurance policy.  As an express or implied co-insured under the property owner’s policy, the subrogating carrier runs into potential issues with the Anti-Subrogation Doctrine and its imposed limitations.

To determine whether the tenant is considered an implied coinsured, some states, including California, look to the specific language of the lease.  Under this approach, courts take a look at the issue on a “case-by-case” basis to determine whether the parties intended when signing the lease for the tenant to be responsible for his damage of the property.

Below is an example of language from a residential lease agreement that has allowed a landlord’s insurer to pursue subrogation recovery against a negligent tenant:

Insurance. Tenant’s or guest’s personal property and vehicles are not insured by Landlord against losses or damage due to fire, theft, vandalism, rain, water, criminal or negligent acts of others, or any other cause. Tenant is advised to carry Tenant’s own fire insurance to protect Tenant from any such loss or damage.

Another consideration for landlord-tenant cases is the lease period.  What if the lease period has already expired?

California Civil Code § 1945 provides: “If a [tenant] of real property remains in possession thereof after the expiration of the [lease agreement], and the [landlord] accepts rent from him, the parties are presumed to have renewed the [lease agreement] on the same terms and for the same time…” This means that when a lease period expires, and the tenant continues paying rent and the landlord accepts those payments, the tenancy automatically transitions from a periodic tenancy into a month-to-month tenancy under the same terms as the expired lease.

In Multani v. Knight (2018) 23 Cal.App.5th 837, 851, the tenant started out as a tenant under a written lease. When, after her second lease expired, she continued to pay rent and the landlord accepted those payments, her tenancy became a month-to-month tenancy under the same terms as the expired lease.  Therefore, a tenant occupying the property is still considered a tenant and the other lease terms govern even though the lease period has expired.  This legal nuance allows us to leverage the language of the expired lease to overcome potential implications of the Implied Coinsured Doctrine in California.

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