Is Your Policy Prepared For Tenant-Caused Fire Damage?

Owning rental property can be a lucrative investment, but it comes with risks—especially when the unexpected happens. One of the most devastating scenarios a landlord can face is a fire started by a tenant. Whether it’s due to negligence (like leaving a candle unattended) or a genuine accident (like a kitchen grease fire), the damage can be severe, the liability complex, and the recovery expensive.
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If you're a property owner, it's crucial to ensure your insurance policy is specifically equipped to handle tenant-caused fire damage. Unfortunately, many landlords assume their coverage is comprehensive—until it's too late to fix the gaps.

Common Causes of Tenant-Caused Fires
According to the National Fire Protection Association (NFPA), tenant activity is a significant contributor to residential fire incidents. Here are some of the most common causes:

• Unattended cooking – The #1 cause of residential fires
• Smoking indoors – Especially in multi-unit dwellings
• Faulty or overloaded electrical appliances
• Use of space heaters near flammable materials
• Candles or incense left burning
• Neglected maintenance requests (e.g., sparking outlets)

Even well-meaning tenants can accidentally trigger a blaze that results in thousands—or even hundreds of thousands—of dollars in damages.


Why It’s Important to Have Landlord Insurance
Unlike standard homeowners insurance, landlord insurance is specifically designed to protect income-generating properties. It typically includes:

• Dwelling coverage to repair or rebuild the rental structure
• Liability protection if someone is injured on the property
• Loss of rental income if the property becomes uninhabitable due to a covered peril
• Optional coverages like vandalism, burglary, and legal fees for eviction

Having landlord insurance ensures you’re not paying out of pocket if your tenant causes fire damage—even if they were at fault. It also helps maintain your cash flow and protects your long-term investment.


What to Check in Your Policy for Fire-Related Coverage
To ensure your landlord policy is fire-ready, review these key components:
1. Fire as a Covered Peril
Make sure fire damage is explicitly listed as a covered event. Most standard landlord policies include fire, but exclusions can vary.

2. Replacement Cost vs. Actual Cash Value
Check whether the policy pays out the replacement cost of damaged property (new value) or actual cash value (depreciated value). Replacement cost offers better protection.

3. Loss of Rental Income Coverage
Does your policy reimburse lost rent while repairs are underway? This is critical for landlords who rely on consistent rental income.

4. Liability Protection
If a tenant or visitor is injured during the fire, or if neighboring units are damaged in a multi-family building, your liability coverage should step in.

5. Tenant Negligence and Subrogation
Understand how your insurer handles claims if the tenant is proven to be negligent. Some insurers may pursue the tenant through subrogation, which could affect your tenant relationship.

6. Named Perils vs. All-Risk Policies
An “all-risk” policy (also called “open peril”) covers a wider range of damage unless specifically excluded. A “named peril” policy only covers incidents explicitly listed—so fire must be included.


Tips to Minimize Fire Risk as a Landlord
While insurance is essential, prevention is the first line of defense. Here’s how to reduce the chances of tenant-caused fire damage:

• Install and regularly test smoke detectors in all units
• Provide fire extinguishers in kitchens and hallways
• Include fire safety clauses in lease agreements (e.g., no open flames, no smoking)
• Require renter’s insurance from tenants (it protects their belongings and may help cover liability)
• Schedule routine inspections to identify potential hazards
• Educate tenants about fire safety and maintenance protocols

Final Thoughts: Don’t Assume—Review and Prepare
Tenant-caused fire damage is more common than most landlords think, and the financial consequences can be devastating without the right coverage in place. Review your landlord insurance policy carefully to confirm that fire-related risks are fully covered and that you’re not exposed to unexpected losses.

Pro Tip: Partner with a licensed insurance agent who understands rental property risks and can customize a policy to suit your needs and property type.

At Hayek Insurance, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (805) 496-8835 or Click Here to request a free quote. 

Disclaimer: The information presented in this blog is intended for informational purposes only and should not be considered as professional advice. It is crucial to consult with a qualified insurance agent or professional for personalized advice tailored to your specific circumstances. They can provide expert guidance and help you make informed decisions regarding your insurance needs.​