Movie massacre: Booby-trapped Colorado apartment raises renter’s insurance questions

John Egan

Residents of the Colorado apartment building that was booby-trapped by mass murder suspect James Holmes may be out of luck if they want to collect money from their renter’s insurance companies.

Renter’s insurance typically covers your personal property if it’s damaged by fire, smoke, explosion or other risks named in your policy, according to the nonprofit Insurance Information Institute. It also pays for living expenses — such as hotel stays and restaurant meals — if you’re forced to evacuate your rented apartment or home.

In the Colorado tragedy, damage apparently was limited to the alleged killer’s apartment. If that is the case, the other tenants in Holmes’ building likely wouldn’t be covered at all. “If there was damage to the building because of an explosion, there might be some coverage,” says Loretta Worters, a spokeswoman for the Insurance Information Institute.

Any structural damage to the apartment building would be covered by the landlord’s insurance.

Worters says standard renter’s insurance policies do include coverage for damage to property and personal possessions resulting from acts of terrorism. So if Holmes’ actions were considered terrorism, renter’s coverage “would apply to damage due to explosion, fire and smoke — the likely causes of damage in a terrorist attack,” Worters says.

“But again,” she adds, “there has to be physical damage in order for there to be coverage for personal possessions or for evacuation.”

Worters points out that insurers always examine the “unique circumstances” of any renter’s insurance claim. The Colorado episode, she says, “was certainly unique and very disturbing.”

All of the explosives in Holmes’ 800-square-foot apartment have been disarmed, authorities say. As of July 23, residents hadn’t been allowed to move back into Holmes’ apartment building.

If Holmes deliberately caused damage to the building and other apartments as well as neighbors’ personal belongings, the neighbors’ and landlords’ insurers could “subrogate back against him as the financially responsible party,” says Carole Walker, executive director of the nonprofit Rocky Mountain Insurance Information Association, based in Colorado. “Of course, it would have to be determined if the suspect has any assets.”

Subrogation refers to the legal right of an insurer to go after someone like Holmes who caused a loss for a policyholder.

“This is done as a means of recovering the amount of the claim paid to the (policyholder) for the loss,” Walker says. “The insurance company would go ahead and pay a covered claim, but take legal action to recover losses from a financially responsible party. The renter or landlord would not be impacted in the settlement process, but it may help them recover their deductibles.”

Residents of Holmes’ apartment building and four surrounding apartment complexes were evacuated and transported a few blocks away to Aurora Central High School, which was being staffed by the Red Cross, according to The Daily Beast. Residents were given less than five minutes’ notice to collect their belongings and board city buses that took them to the school.

Holmes, 24, is accused of killing 12 people and injuring another 58 in a shooting rampage July 21 during a showing of the latest “Batman” movie at a theater in Aurora, a Denver suburb.