A tenant’s negligence causes a fire in the dwelling they rent.

The insurer that issued the homeowners policy is typically the party that initially pays for the damage to the dwelling. The property owner insures the building, so when the building suffers insured fire damage, the owner’s property insurer responds first according to the policy terms. The tenant’s negligence may create a liability exposure, but that does not usually change the first-party property claim sequence. After paying the owner, the property insurer may consider subrogation against the negligent tenant or the tenant’s insurer, depending on the lease, policy wording, provincial law, waiver provisions, and surrounding facts. Option A is too direct because the tenant may be legally responsible, but they do not normally “initially” pay the insured building claim. Option C may respond if a liability claim is pursued against the tenant, but it is not the first insurer paying the property owner’s building loss. Option D is wrong because the owner is not responsible for the tenant’s negligence merely because the tenant occupies the dwelling. References/topics: Property Insurance—Exposures; tenant negligence, first-party property insurance, tenant’s legal liability, subrogation.