Playing With An 800 Pound Gorilla

In sports, a handicap is about equalizing the odds of the outcome of the event. For example, if I played tennis with a Wimbledon champion, I would have to start with a two set advantage plus a 5:0, 40-0 lead in the third. If this spectacle ever took place, I would expect to have 50:50 chance of winning.

Now, if on the same tennis court I met a complete stranger who challenged me to the same game of tennis, the appropriate level of handicap, for either player, would be somewhat more difficult to assess. Perhaps, the handicap adjustment would be based on physical appearance alone. Other factors that may come into play could be as varied as the opponent’s age or the quality of his tennis racket. Or attitude may be the critical factor – “I will play single against you and your doubles partner in the same match,” taunts the opponent. “Any par tner?” – You are on!

In the landlording game, landlords often assume supremacy relative to the tenant’s skills. The tenant is presumed to be financially weak and experience short. So, when signing the lease, landlords do not want the future tenant, whom they never met before, to cry “foul” later. “We must hold the odds even” landlords reckon, “Just in case a fire destroys everything the tenant’s got. Or a flood. I have insurance. But does the tenant? The least I must do for the tenant is to recommend getting renters insurance of their own.”

A typical residential lease application form includes the hint: “Will applicant maintain renters insurance?” Subsequently, the lease agreement states that landlord’s insurance policy does not protect the tenant from the loss of personal property.The lease recommends that the tenant obtain renters insurance for personal casualties.

With the renters insurance recommendation in place, after the lease is signed by the tenant, the landlord rests easy. The level playing field is equalized. Not only is the tenant protected against a loss, in case of damages, with the tenant made whole, there is no need for the liability lawsuit against the landlord. If the tenant does not purchase renters insurance…well, he’s been warned. And more importantly, the tenant’s intent not to sue the landlord for negligence was secured in advance. For the tenant to sue the landlord, after the recommendation to obtain renters insurance was made and acknowledged, would be contrary to the basic fairness of the advice.

And sure enough, a few months into the lease, a water pipe breaks while the tenant
is on vacation and water damages the tenant’s belongings. If the tenant heeded the landlord’s advice and obtained renters insurance, the tenant suffered no loss except for a temporary inconvenience. Still, before the tenant receives the insurance check, he must put up with just one more annoyance. He must agree to help make his insurance company whole and sign off on the subrogation clause. No problem.

The tenant’s insurance company is a well-funded guerrilla.There is money in the war chest and a mission to keep it full.The guerrilla is well organized to protect its interests. His army of experienced insurance adjusters quickly does the job.The landlord is now advised about the real root of the plumbing breakdown: the water line was not fixed well enough before. Subrogation clause has a value to the guerrilla. Reimburse ME or I will sue! The request for reimbursing the guerrilla is no trouble to the landlord. After all that’s what the landlord’s own insurance liability policy is for. But since the landlord’s liability policy is now either reimbursing the tenant’s insurance company or paying the tenant directly, one must wonder what taunting the tenant about personal responsibility was about.

Landlords are in an inferior position relative to tenants in the landlording game. But there are a few handicap points available to the landlord.The insurance policy to protect the landlord against the losses caused by the tenant does not even exist. And when a weak but boisterous player taunts, a strong challenger looks for an opening; the game quickly accelerates to the level that’s just beyond the landlord’s liability insurance policy limits.

Landlords must accept the fact that the availability of the insurance liability policy does not create an advantage; it merely equalizes the playing field. Taunting the tenant creates a conflict and wastes the landlord’s precious handicap points.


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