April 17, 2018

Insurers and the Negligent Tenant; Hoosier Insurance Company v. Riggs

Category: Indiana Law Review | Author: | Share:

Insurance companies which insure rental property are taking some risk, as tenants may have less incentive to prevent damage than the owner of the property. But they may also be taking on other kinds of risk, as not having the ability to make a subrogation claim against those tenants.

The Harkers owned property in Lebanon that was insured by Hoosier. The Harkers leased the property to the Riggses under the terms of a written lease. That lease required that the Riggses commit no waste on the property, and that they obtain fire and renter’s insurance.

While the Riggses leased the property, they allowed Blevins to reside there, too. One day, Blevins left burning incense unattended, which resulted in fire damage of over $42,000. Hoosier paid these damages on behalf of the Harkers.

Hoosier filed a complaint against the Riggses for breach of contract. The Riggses moved to dismiss, arguing that Hoosier wasn’t a real party in interest. Hoosier argued that it was, because its payment of fire damages allowed it to be subrogated to the Harkers’ landlord rights. The trial court granted that motion, and Hoosier appealed.

On appeal, the Court noted that there are three different approaches Courts have taken to this issue: (1) no-subrogation; (2) pro-subrogation; and (3) a case-by-case approach. A prior panel of the Court of Appeals (Mannia) had advocated for the case-by-case approach, reasoning that it “best effectuates the intent of the parties by simply enforcing the terms of their lease.” In applying this test, the trial court was to (1) consider the language in the lease and other evidence to determine the parties’ expectations, and (2) apply “principles of equity and good conscience.”

When the Court applied these principles to this case, it found that it was improper to dismiss Hoosier at this time. It found that

the related threshold questions of (1) whether the Lease manifests the parties’ intent regarding the appropriate party to bear the risk of fire loss; and (2) whether the Harkers’ right to pursue damages for breach of contract from the Riggses inures to Hoosier, such that Hoosier is a real party in interest entitled to pursue subrogation relief

were simply not resolved by the complaint. Thus, the trial court improperly dismissed Hoosier. And it is unlikely that many cases like this could be dismissed at the initial stage of the proceedings.


Indiana does not apply a bright-line approach to determining whether a landlord’s insurer is subrogated after covering damage to the leased premises.