The occupant of a building under a lease and the building owner were indemnified by their respective package policy insurers when the structure and its contents were badly damaged by fire. The tenant's insurer brought a subrogation action against the landlord, alleging negligence on its part caused the fire. It appealed from trial court judgment for the landlord that was granted on the theory that the landlord was a coinsured under the tenant's fire insurance and, therefore, could not be liable to the insurer.

It was confirmed that the lease required that the landlord be named a coinsured (additional insured) in liability insurance carried by the tenant. This was done. The landlord was not named an additional insured under the property insurance coverage part of the tenant's policy, there being no requirement in the lease provisions for such endorsement.

The landlord argued that, because the tenant was an "implied insured" under the fire insurance carried by the landlord on the building, equitable treatment would grant the same status to the landlord with respect to fire insurance carried by the tenant.

The Alaska Supreme Court noted that, practically speaking, premiums paid by a landlord for its building insurance are figured into rent paid by the tenant. This is the rationale for the "implied insured" doctrine that is applied to a tenant with respect to its landlord's building fire insurance. The contention is that the tenant should benefit from its payment of the cost of the landlord's fire insurance.

The high court stressed that the reverse is not true. No consideration is given by the landlord for protection as an "implied coinsured" under the tenant's fire insurance With this in mind and the fact there was no lease requirement for the tenant to provide fire insurance for the landlord's benefit, there was no basis for denial of subrogation recovery.

The judgment of the trial court was reversed in favor of the tenant's insurer and against the landlord.

(GREAT AMERICAN INSURANCE COMPANY ET AL., Appellants v. BAR CLUB INCORPORATED, dab THE BUCKAROO CLUB, Appellee. Alaska Supreme Court. No. 3AN-92-4065. July 26, 1996. CCH 1996 Fire and Casualty Cases, Paragraph 5785.)