Interim Relocation Coverage Under Homeowners Policy

Question

We had a flood in a rental property in Philadelphia, PA. The floors are now "dry" but there is significant water damage and the walls and ceilings are soaked.

To prevent mold from forming, as soon as tomorrow a remediation company is coming. The adjuster from the insurance company has not come out, yet, although a claim is filed.

We have been asked by the tenants to move them out, because they work from home, placing phone calls, etc. The noise of the fans, dehumidifiers, walls being demolished, and other is bound to be intense, and disruptive.

If there is a critical time when they need to be out of the house is more now than in the future, when everything is dry, and they are just putting walls back up again.

So the question is, How can we make it happen so that the insurance company honors our request to grant our tenants temporary housing under our landlord-homeowners policy without delays?

Thank you in advance!

Answer 1

It depends what the terms of your lease and the insurance policy are.

In general, most leases do not oblige the landlord to pay for temporary accommodation if the property is unusable (other than through the landlord's neglect) - the only remedy the tenant generally has is that they do not have to pay rent for that period and it may be grounds for the contract to be terminated; either explicitly or through the doctrine of impossibility (e.g. if the building is destroyed it is clearly impossible to live in it).

Even if it does, the tenant is asking to be relocated for convenience; not because the property is unusable. A residential lease would require the property to be unusable as a residence; the fact that it is unusable as a place of business is not relevant.

Unless the lease imposes an obligation on the landlord in these circumstances the insurance company would, quite rightly, see this as your gift to the tenant and not something they are liable to reimburse.

Even if the lease does impose this obligation you need to see if consequential loss (loss as a consequence of being unable to provide the premises) is covered under the insurance policy. That is, if the tenant can't use the premises and therefore stops paying the rent does the policy step in to pay the loss of the rent to the landlord.