# Got a call from Collection agency on an account I don't have! Can they do that??



## mcu (Dec 6, 2009)

I need some advice guys.

I got a call from a collection agent yesterday asking me to pay $2,000+ from an insurance company. Here is the situation. I never had an account with this insurance agency. I own a rental property and about six months ago, the hot water tank leaked from the 2nd floor to the 1st in the tenants room. So obviously they made a claim and now the insurance company trying to make me pay for it. I asked the adjuster back then to send me a list of what they paid out and have yet to receive anything. All I know is that they bought the tenant a new bed, mattress (I have pics that both look fine), $50 pillows, etc. The tenant happened to have his laptop, iphone and other stuff right on the small spot of the bed that the water leaked on. 

Anyway what am I obliged to pay? Can the collection agency ruin my credit if I have never signed any agreement with this insurance company? He is calling/harassing and treating me like a criminal and when I told him the situation he didn't believe me. I tried calling the insurance company to get a detail of what they are claiming and after 45 mins trying to locate the file, they are not allowed to give me any info because the policy is not under my name. 

Makes you crazy!!


----------



## MoneyGal (Apr 24, 2009)

From what you've written, the original insurance policy is attempting to recover the costs it paid out to the insured based on a loss caused by a situation for which you are responsible (the hot water tank leaking). 

This is the principle of subrogation, which is defined as the right for an insurer to pursue a third party that caused an insurance loss to the insured.

Whether or not you have a contract with the subrogating insurance policy is not at issue, and the insurance company has every legal right to pursue their claim. If you look in your own insurance policy, it will have a subrogation clause also. 

You should be contacting your own insurance company. Typically subrogation happens between insurance companies. The payment would typically be made from one insurance company to the other insurance company. Did you not make a claim for the water tank leak on your end?


----------



## fatcat (Nov 11, 2009)

+1 to the gal's post ...

sounds like the renter made a claim on his tenants insurance and his insurance company is coming after you after paying his claim

where is your insurance ?

your policy should cover water damage and you should have filed the claim on your insurance and have it pay him ....


----------



## mcu (Dec 6, 2009)

I never made a claim because the damage was minimal and below my deductible. Tenant had told me at the time that it was not much for them also and under their $500 deductible, but all of a sudden the story changed and tenant told me she is getting new laptop, iphone, etc. Now they are claiming $2000+. I understand it is my responsibility since my water tank leaked, but shouldn't I be able to defend myself and wouldn't they have to get a judgement against me to try to collect with an agency and try to ruin my credit?? 

I am ok with paying for what I should, but I just don't agree to paying for a laptop, iphone, new bed (the actual bed) and more when I have pics of them being undamaged. I feel like I am being taken for.


----------



## MoneyGal (Apr 24, 2009)

The damage to YOUR unit was below your deductible; the damage to your tenant's unit was not below your deductible. 

You are not going to have a lot of luck inserting yourself between your tenant and her insurance company;_ your insurance company would have negotiated with the other insurance company if/when you'd involved them_. 

Now that (presumably) the claim has been paid out and your own insurance company was not involved, you have no recourse except through your own insurance company. They may not agree to cover the costs. Either way you are out the money, either in increased premiums to your insurance company over time, or payment to your tenant's insurance company.


----------



## mcu (Dec 6, 2009)

Thanks Gal....So in the future, if i were to ever get any damage to a unit, regardless if low or high, I should always make a claim?? I didn't make a claim just because i didn't want my premiums to reflect a claim and go up over time.

In this case, I have no chance to fight it? Even with pictures of what they replaced being undamaged??


----------



## mcu (Dec 6, 2009)

Also, can they demand that I pay out their client's deductible?


----------



## MoneyGal (Apr 24, 2009)

They can. It is a principle of subrogation that the insurer "stands in the shoes of the insured" and attempts to recover the costs borne by the insured as well as the costs they've paid out.


----------



## MoneyGal (Apr 24, 2009)

mcu said:


> Thanks Gal....So in the future, if i were to ever get any damage to a unit, regardless if low or high, I should always make a claim?? I didn't make a claim just because i didn't want my premiums to reflect a claim and go up over time.
> 
> In this case, I have no chance to fight it? Even with pictures of what they replaced being undamaged??


You can fight it; I just think there is little likelihood of success. Regardless of whether you think the claim should have been paid, it was paid, and that's what they are coming after you for.


----------



## Synergy (Mar 18, 2013)

mcu said:


> Tenant had told me at the time that it was not much for them also and under their $500 deductible, but all of a sudden the story changed and tenant told me she is getting new laptop, iphone, etc. Now they are claiming $2000+.


Unfortunately these types of things happen all to often and one reason we all pay high insurance premiums - people taking advantage of the system (auto, home, extended health care, etc). There are a lot of people with their hands in the cookie jar.

If you have an independent insurance broker they'd be a valuable source of information for you.


----------



## MoneyGal (Apr 24, 2009)

Synergy said:


> Unfortunately these types of things happen all to often and one reason we all pay high insurance premiums - people taking advantage of the system (auto, home, extended health care, etc). There are a lot of people with their hands in the cookie jar.
> 
> If you have an independent insurance broker they'd be a valuable source of information for you.


So...if your landlord's water heater leaks on your bed, computer, and phone, you shouldn't make an insurance claim? 

What the OP should have done if he wanted to limit his exposure was to pay his tenant / discount her rent by an agreed-upon amount so she (or he; OP uses both genders in his/her posts) would not make an insurance claim. HOWEVER, even that would have not prevented her/him from making a claim.


----------



## Synergy (Mar 18, 2013)

If the tenants property is damaged then yes, by all means put in a claim. What I'm talking about is people who take advantage of the situation and claim items that were never damaged, stolen, etc. in the first place. People will attempt to included "extra" items in order to offset the deductible they have to pay. The way the OP explained the situation things just seemed a little suspect. It could have been a valid claim on behalf of the tenant.


----------



## MoneyGal (Apr 24, 2009)

I don't disagree with you. But the very first post said [paraphrasing] "the tenant had his phone and computer right on the section of the bed the water heater leaked on." 

I know that insurance fraud is a huge problem. But would you want your landlord (if you had one) deciding whether your property should be replaced if water leaked on it through your ceiling...or your insurance company? What if your landlord made no attempt to resolve your damages? (I don't know what happened; I'm just going on what was posted.)


----------



## mcu (Dec 6, 2009)

Gal,

I was told, by my insurance company, it was actually illegal to pay your tenant and incentive for damages. I was ready to offer the tenant a discount on the month, but my insurance company told me I was not allowed to do that legally as she can take the money, still make a claim and then I have no recourse. Anyway that is besides the fact that I didn't make a claim because I took the tenant's word that told me they didn't have much damage and not worth to claim. I didn't avoid trying to take responsibility, but at the same time, I don't agree on having to pay an over exaggerated amount just because people are trying to defraud the system. 

If I give them the benefit of the doubt, until now I had the adjuster call me the month it happened and asked him to send me a list of damages, which they never did. Now all of a sudden I get a call from collections claiming over $2000. I called the insurance company to get more details a few hours ago and they can't give me any info because the policy is not under my name. What am I suppose to do if they can't provide me with info??


----------



## mcu (Dec 6, 2009)

Gal I get what you are saying....but the water leaked at the end of the bed (feet section), yet, they are claiming two $50/each pillows (I've never seen $50 pillows...and in a kid's room? but anyway) , a laptop and iphone and a new bed and mattress, yet I have no floor damage, to visual damage to bed even two weeks after the event. I really do understand what you guys are saying and not trying to be one of those scum landlords that don't want to pay....I just feel like I am getting had for.


----------



## MrMatt (Dec 21, 2011)

I am not a lawyer, but this is what I would do.

Forward it off to your insurance company.
Your claim is really the damage that this insurance is blaming you for.

Nobody can randomly assign a debt to you without a contract or court judgement/order of some sort. 
I think it was a bit of a mistake to acknowledge this debt in any way. Your response should be along the lines of 

"Please do not contact me until you have provided the complete documentation supporting your claim"
If the collection agency contacts you again, file a complaint with the body in your province that they are making a claim without providing appropriate documentation.

Also check your credit report, and dispute any such false reports.


----------



## MoneyGal (Apr 24, 2009)

It isn't illegal, it's just unworkable - for the reason your insurance company gave. 

And while your tenant's insurance company might (or, sounds like, won't) give you access to the list of items they covered, it won't make any difference for you. Their adjuster paid out the claim, and now the insurance company is seeking to recover their costs from you. Whether or not you think they should / should not have paid out the claim isn't going to change your liability, unfortunately. Your actual liability is not what you think your tenant's insurance company should have paid, but what they did pay. 

I'm sorry if my posts seem argumentative, they aren't intended to. I wish that more people took an interest in subrogation before they were essentially forced to.


----------



## MoneyGal (Apr 24, 2009)

MrMatt said:


> I am not a lawyer, but this is what I would do.
> 
> Forward it off to your insurance company.
> Your claim is really the damage that this insurance is blaming you for.
> ...


It isn't a false claim, and they aren't required to provide him with detailed documentation. I promise you this process is underway all around you every day, whether you are aware of it or not. Subrogation is a common law right and if we didn't have it, insurance premiums would actually be much, much higher.


----------



## mcu (Dec 6, 2009)

ok..thanks MrMatt, Synergy and Gal. I would love to hear of personal experience from any insurance brokers on here. How can I edit my subject to get their attention? 
anyone know of any on here?


----------



## Synergy (Mar 18, 2013)

"Tenant had told me at the time that it was not much for them also and under their $500 deductible, but all of a sudden the story changed and tenant told me she is getting new laptop, iphone, etc."

That sentence through up a few red flags for me. If my smartphone and laptop was sitting in a puddle of water there's no way I'd say the damages will be under my $500 deductible. I took the OP's first sentence "The tenant happened to have his laptop, iphone and other stuff right on the small spot of the bed that the water leaked on" as a questionable comment on behalf of the tenant - like the OP thinking to him or herself, what's the likelihood of that happening...

I believe we have insurance adjusters for that very purpose - help determine what should be repaired, replaced, etc. It's not up to the landlord that's for sure. If one doesn't agree with the adjusters, then I guess you have mediators, lawyers, etc. to help resolve the situation. As you've previously mentioned, sometimes landlords and tenants can work things out between themselves - then that's great.

With regards to personal property damage it's always a good idea to keep a detailed list of your contents, pictures of the premises, etc. in case of a fire, theft, etc. It will help when it comes time to claiming a loss.

Don't get me wrong, insurance companies can be just as crafty and unfortunately I don't have any good solutions on how to make the process fair and equitable for all parties.


----------



## Synergy (Mar 18, 2013)

MoneyGal said:


> Subrogation is a common law right and if we didn't have it, insurance premiums would actually be much, much higher.


I agree, it's a good thing...


----------



## Rusty O'Toole (Feb 1, 2012)

I wouldn't give them a dime. Have been in a similar situation where someone tried to charge me for something I didn't authorize, and in fact there was no evidence the work was done.

Every month for over a year I got a bill and every month for over a year, I called them and asked what proof they had that the work was done. I really wanted to know, because so far as I knew there had been no work done and I was curious what they based their bill on.

Every month they promised to look into it then the next month, same thing again.

Finally they sent it to collection and the same rigamarole started over. I kept asking for some proof I owed the money, they didn't have any. They threatened to sue, I said good, I will finally get to see what evidence you have.

Every time they called they kept offering to take less and less money. Last call, the guy said "why don't you pay it? It's only $26?" I said "Why don't you pay it?" He said "I don't owe them any money" I said "Neither do I" and that was the last I heard about it.

I can't see them suing for $2000. If they do you have evidence that the bill was trumped up, that you never authorized it, and that the whole thing is arbitrary and unfair. Even in small claims court they won't get away with it.

I wouldn't give those chiselers anything.


----------



## HaroldCrump (Jun 10, 2009)

Perhaps @MoneyGal (or someone else) can explain what the OP _should _have done in the original situation i.e. when the event was reported by the tenant.
As a home owner, should he/she have made a claim, regardless of the amount?
Or should he/she have simply reported it as an FYI to the insurance company?


----------



## MrMatt (Dec 21, 2011)

MoneyGal said:


> It isn't a false claim, and they aren't required to provide him with detailed documentation. I promise you this process is underway all around you every day, whether you are aware of it or not. Subrogation is a common law right and if we didn't have it, insurance premiums would actually be much, much higher.


Moneygal, unless I'm wildly mistaken, the subrogation is basically the tenant passed his legal claims against the poster to his insurance company.

It doesn't give insurance companies some magical power to send bills to whomever they want.

The way it works is simple.
1. Someone feels they suffered a loss.
2a. They can contact the person and negotiate a settlement.
or 
2b. They can sue the person for the damage they suffered.
3. Collect on the debt.

Subrogation is just passing the rights to #2 & #3 to the insurance company. They don't get to skip the middle step.
Typically insurance companies negotiate a settlement, it's way cheaper than court.

It is odd that they jumped right to a collection agency. 

As far as the collection agency refer to http://www.sse.gov.on.ca/mcs/en/Pages/Personal_Finance_Collection_Agency_Rights.aspx
Obviously he disputes the debt, act accordingly.

FInally he should contact his insurance company with the issue, they should handle it. 
If not (consider a new insurance company) and negotiate or let them take you to court, at which point they'll have to justify their claim against you.

Let us know how this works out.


----------



## alingva (Aug 17, 2013)

check your credit history from transunion and equifax. Collection agency can do whatever they want, the same time you can sue them if you want. Pretty fair game


----------



## MoneyGal (Apr 24, 2009)

MrMatt said:


> Moneygal, unless I'm wildly mistaken, the subrogation is basically the tenant passed his legal claims against the poster to his insurance company.
> 
> It doesn't give insurance companies some magical power to send bills to whomever they want.
> 
> ...


The tenant did not pass his claim against his or her insurance company on to the LL. The insurance company is passing its costs onto the LL. This is the essence of subrogation, which you could call a "magic power" if you want. Whether or not the LL pays the bill or disputes it, the move to a collection agency is normal (how else is the tenant's insurance company going to collect? for small amounts they will have retained a collection agency).


----------



## MrMatt (Dec 21, 2011)

MoneyGal,
I understand what is happening, you seem to miss the point.
When someone issues you a bill that you didn't agree to, you don't have to pay it, and it shouldn't go on your credit report, nor should you have to deal with a collection agency. The right step is for them to take it to court.

Additionally,
If the loss actual loss the tenant suffered was ~$500, then that's all he should ever have to pay.
The fact that the insurance company paid out a fraudulent claim for $2000 is THEIR problem, not the LL.

If the laptop wasn't damaged by the LL, he shouldn't have to pay for it, even if the insurance company decided to. 

Remember insurance companies operate on what makes sense, if it is a small claim that seems reasonable, it's cheaper to pay it out than investigate and pay it out in the cases it actually happened.


----------



## MoneyGal (Apr 24, 2009)

I take your point, but I don't think you understand subrogation (or how insurance works. How do you think insurance claims are actually settled?). This is not the tenant pursuing the LL, but the insurance company. And whether the claim was "fraudulent" or not, the insurance company is entitled to pursue the LL for the full amount of the loss, including the tenant's deductible. 

Whether or not the LL pays the amount is a separate issue from whether or not the insurance company is entitled to pursue the claim. The LL's "agreement" is not required.


----------



## MrMatt (Dec 21, 2011)

Normally the insurance companies just settle with each other.
The insurance company can pursue for the loss. 

However there is a process, they settle (agree) or they go to court, it seems that this step was skipped.

Finally, the amount of liability is an interesting question.

Assuming there was $500 in damages, that's plus reasonable fees, is all the ll is liable to the tenant for.
Subrogating to the insurance company doesn't change that. 
The LL is not liable for the inflated (fraudulent) insurance claim. 
The LL is also entitled to all information regarding the claim, which he will get if they take him to court.

Could you imagine the chaos if we could willy hilly assign others to pay us for damage that was never suffered?


----------



## MoneyGal (Apr 24, 2009)

The OP didn't involve his insurance company, which is why the tenant's insurance company is pursuing him. There's a reason that the OP should have involved his insurance company: because the adjusters would have negotiated with one another and the LL would not have been involved. That's the way he could have contained his liability.


----------



## mcu (Dec 6, 2009)

MrMatt's thoughts are identical to mine. I am not saying that the insurance company has no right to try to collect, but shouldn't they try to contact me and work something out rather than sending a collection agency after me. I also do believe I should be able to dispute the charges if I really think something is wrong. I admit I am no lawyer or know all the laws, but I just don't find it logical for a company to be able to bill me for something I never agreed upon. If they really want to collect, take me to court, give me a chance to defend myself and if I really have no case and lose in court, then I will pay. I worked hard to build my credit and always pay my bills on time, so having someone trying to ruin it, is frustrating!


----------



## MoneyGal (Apr 24, 2009)

It isn't worth it to them to take you to court. If you google "subrogation collections" for your area you should be able to find one or more collections agencies who take on subrogation claims. 

Your best bet, which I think I said in my second post, would be to contact your own insurance company and see if they will enter into an agreement with the tenant's insurance company. The only reason you even know about how much the tenant's insurance company paid out is they are pursuing you directly for it. Normally this would be worked out between insurance companies directly.


----------



## MrMatt (Dec 21, 2011)

Yes the OP should involve his insurance company.

However that the tenants insurance company decided to investigate and pay out without even contacting the liable party, and even now refusing to provide any justification for their claim, really portrays them poorly.

The LL liability remains the actual damages suffered.


----------



## Retired Peasant (Apr 22, 2013)

The OP said "I am ok with paying for what I should, but I just don't agree to paying for a laptop, iphone, new bed (the actual bed) and more when I have pics of them being undamaged. I feel like I am being taken for. "

If he has pics of them being undamaged, could he not provide these to the tenant's insurance company as proof of fraud? Let the insurance company go after their client, the tenant, for a fraudulent claim.


----------



## Synergy (Mar 18, 2013)

Retired Peasant said:


> The OP said "I am ok with paying for what I should, but I just don't agree to paying for a laptop, iphone, new bed (the actual bed) and more when I have pics of them being undamaged. I feel like I am being taken for. "
> 
> If he has pics of them being undamaged, could he not provide these to the tenant's insurance company as proof of fraud? Let the insurance company go after their client, the tenant, for a fraudulent claim.


Just playing devils advocate here - but how could a picture determine whether an electronic device has been damaged or not?



mcu said:


> I am not saying that the insurance company has no right to try to collect, but shouldn't they try to contact me and work something out rather than sending a collection agency after me.


I completely agree. This is considered a form of harassment in my opinion. The insurance company should have attempted to contact you first. Personally I'd hand over the issue to your insurance company - it seems a little to complicated to resolve on your own.

Best of luck with it.


----------



## crabbygit (Nov 6, 2013)

Was there any outcome to the issue at hand in this thread? I am interested to know what was the conclusion if any.


----------



## Longwinston (Oct 20, 2013)

mcu said:


> Gal,
> 
> I was told, by my insurance company, it was actually illegal to pay your tenant and incentive for damages. I was ready to offer the tenant a discount on the month, but my insurance company told me I was not allowed to do that legally as she can take the money, still make a claim and then I have no recourse. Anyway that is besides the fact that I didn't make a claim because I took the tenant's word that told me they didn't have much damage and not worth to claim. I didn't avoid trying to take responsibility, but at the same time, I don't agree on having to pay an over exaggerated amount just because people are trying to defraud the system.
> 
> If I give them the benefit of the doubt, until now I had the adjuster call me the month it happened and asked him to send me a list of damages, which they never did. Now all of a sudden I get a call from collections claiming over $2000. I called the insurance company to get more details a few hours ago and they can't give me any info because the policy is not under my name. What am I suppose to do if they can't provide me with info??


Have you considered raising the tenants rent as recourse?


----------



## OhGreatGuru (May 24, 2009)

mcu said:


> Thanks Gal....So in the future, if i were to ever get any damage to a unit, regardless if low or high, I should always make a claim?? I didn't make a claim just because i didn't want my premiums to reflect a claim and go up over time....


You don't "make a claim". You inform your insurance company that they may receive a claim for damages from either your tenant or his insurer under the liability part of your policy. It seems to me the reason you are in this mess is because you didn't tell your tenant "Here's my insurance company - I have notified them - tell your insurer to talk to them." By trying to reserve the right to decide if you were going to inform your insurance company, you have tacitly told the tenant and his insurance company to sue you directly in order to recover their costs.


----------



## alingva (Aug 17, 2013)

A little bit off topic, there is an article how credit score works, at the end of the article there are links to download free credit history request forms. Request your reports by fax or mail, when you get them you will know how to file a complaint


----------

