In this case, Mrs Golovina rented a cottage from Mrs Fresca-Judd. The tenant was away from the property during Christmas 2010 and, during her absence, the water pipes froze and then burst in the cold weather. The resultant flooding caused significant damage to the property, in the alleged sum of £128,000.
The insurers, NFU Mutual, paid out for the damage pursuant to an insurance policy taken out by the landlord against such risks as water damage. The insurers then sought to recover the sum of £128,000 from the tenant contending that she was in breach of the terms of the tenancy agreement by not keeping some heat on in the property while she was absent and so was responsible for the flooding.
The insurers invoked the principle of subrogation. The insurers, having indemnified the landlord against the flood damage, claimed to be subrogated to the landlord’s rights against the tenant, who they maintained was responsible for the loss. In effect, the insurers stepped into the landlord’s shoes as against the tenant.
The claim was dismissed. Firstly, the insurers, through the landlord, had failed to prove evidentially that the tenant had turned the heating off. Instead, the heating could have failed through a mechanical problem. Secondly, the principle of subrogation was not applicable to this case. The tenant submitted that the insurance policy was for the benefit of both the landlord and tenant and, as subrogation cannot apply in a claim where the tenant is jointly insured, the insurers had no subrogated rights.
While the principle of subrogation was misapplied in this case, a landlord’s insurers can sue a tenant where a tenant has caused the insurers’ loss provided that the insurance policy was just for the benefit of the landlord.