Rental Basement Injury Demand and the Limits of a Property License
A Durham homeowner rents a basement apartment to a tenant. The homeowner has an HO-3 with $300,000 personal liability and a separate DP-3 policy on a rental duplex. A guest of the basement tenant falls on an icy exterior stair and fractures a wrist. The guest demands $75,000, alleging the handrail was loose and the steps were not salted. The homeowner’s HO-3 insurer reserves rights, citing the business-pursuits exclusion and an exclusion for premises rented to others. The DP-3 insurer says the claim is covered but only after the HO-3 denies. The homeowner also has an open water-damage claim from a burst pipe in the basement, and the public adjuster has been hired for that property claim. The homeowner asks the public adjuster to “take over” the injury demand, write a demand letter to the HO-3 insurer, and tell the guest that the handrail was fine. The public adjuster has no attorney on staff.
1. What is the scope of the public adjuster’s authority on the injury demand?
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Scope. A North Carolina public adjuster license authorizes adjusting first-party property claims, not defending or negotiating a third-party bodily-injury liability demand. Writing a demand letter and assuring the guest that the handrail was fine would be unauthorized practice and could create personal liability. The adjuster should tell the homeowner, in writing, that the injury claim must go to a liability adjuster or attorney. The adjuster may continue the burst-pipe property claim but must keep the two files separate and must not use the property file to negotiate the injury demand.
2. How should the two liability policies be analyzed and tendered?
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The HO-3 and DP-3 should both be tendered. The HO-3’s business-pursuits and rented-premises exclusions may bar the landlord exposure, but exclusions are interpreted narrowly and the facts matter: a basement apartment, separate access, and rent may make the rental a business pursuit. The DP-3 is designed for landlord liability and may be primary. The insurers should resolve contribution; the insured should not rely on a coverage denial letter without comparing both policies. The adjuster should advise the homeowner to notify both carriers immediately and preserve the stair and handrail evidence.
3. What should the adjuster do with the homeowner’s request to reassure the guest?
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The adjuster should decline. Any statement about the handrail’s condition could be treated as an admission or as unauthorized claims advice. Instead, the adjuster should document the request, explain the licensing limit, and refer the homeowner to a liability adjuster or attorney. The adjuster can help preserve photos, incident reports, weather records, and maintenance logs, but should not communicate with the claimant or the claimant’s representative about fault. A short written referral protects both the homeowner and the adjuster.