by Michael Papuc
Attorney at Law
44 Montgomery Street
Suite 2405
San Francisco, California 94104
415-773-1755
San Francisco Attorney Michael Papuc represents policy holders in lawsuits against insurance companies.
Very often, a landlord will require in a lease that the tenant will pay insurance premiums for the Landlord to purchase insurance for the property the tenant occupies. When the tenant does this, the tenant becomes an implied co-insured with the landlord under the insurance policy. If a loss occurs to the property negligently caused by the tenant, the landlord’s insurer will pay for the loss. Typically the insurer would be entitled to subrogate against the person responsible for the loss. However, the landlord’s insurer will not be able to subrogate against the tenant, who paid the premiums on the policy, through payments required in the lease.
“No right of subrogation can arise in favor of an insurer against its own insured since, by definition, subrogation exists only with respect to rights of the insurer against third persons to whom the insurer owes no duty.” (St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp. (1976) 65 Cal.App.3d 66, 75.)
Where a loss is caused by the tenant’s activities, no subrogation right exists against the tenant because the tenant be is treated as an implied in law co-insured. (Liberty Mutual Fire Ins. Co. v. Auto Spring Supply Co. (1976) 59 Cal.App.3d 860, 865.)
Even if not named in the policy, the tenant is treated as an implied in law coinsured: “It is quite obvious … that the parties to the lease … all intended that the proceeds of … the fire insurance policy, maintained at [tenant's] expense, were to constitute the protection of all parties to the lease document … It would also be inequitable to allow [insurance company] to transfer the risk wholly to [tenant]–the entity which paid [insurance company's] premiums … to avoid this very risk.” (Liberty Mut. Fire Ins. Co. v. Auto Spring Supply Co., supra, 59 CA3d at 865.)
