Property Management
What is 'subrogation' in property insurance and why does it matter to Nevada property managers?
AThe assignment of lease rights from one tenant to another
BThe right of an insurance company that has paid a claim to pursue recovery from the party responsible for causing the loss — landlords and property managers should ensure leases address subrogation waivers to prevent insurance companies from suing tenants for insured losses✓ Correct
CA Nevada law allowing tenants to withhold rent for unrepaired damages
DThe transfer of property management duties to a substitute manager
Explanation
Subrogation allows an insurer who pays a claim to 'step into the shoes' of the insured and pursue the party that caused the loss. Without a subrogation waiver, if a tenant accidentally causes a fire that the landlord's insurance covers, the landlord's insurer can sue the tenant for the amount paid. Nevada property managers should include mutual waiver of subrogation clauses in leases and ensure both landlord and tenant carry adequate insurance to prevent this scenario.
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