The occupant of a building, under terms of a commercial lease, was obligated to purchase fire insurance on it. The lessee failed to secure a policy. The landlord carried fire insurance on the property, and was paid a substantial sum by the insurer when the building was damaged by fire through no fault of the tenant.

The insurer sued the commercial tenant to recover the amount that it paid, claiming subrogation rights by virtue of the tenant's breach of contract in failing to buy insurance. Trial court judgment dismissing the lawsuit was appealed by the insurer.

The appeal court cited numerous cases in concluding that the landlord did not have a right of subrogation against the tenant. It observed that the tenant "did not contractually assume the risk of loss by fire; it only assumed the obligation of purchasing fire insurance." The court said that the insurer may have been subrogated to the rights of the landlord if the lease fixed liability on the tenant for loss or damage to the insured property. Such was not the case, however.

The court quoted from Indiana Insurance Company v. Collins, 359 So.2d 916, 917 (Fla. 3d DCA 1978) as follows: "After payment of a loss to its insured, an insurer may be subrogated to any right of action that the insured may have against the third person whose negligence or wrongful act caused the loss."

The court noted that, in the case at hand, the insurer's subrogation claim was based only on failure by the tenant to buy fire insurance. That failure did not cause the fire, which occurred through no fault of the tenant.

The landlord, having been paid by its insurer, did not suffer damages. Accordingly, the court concluded that the insurer failed to establish a claim for subrogation. In a subrogation action, the insurer stands in the shoes of its insured.

The judgment of the trial court was affirmed in favor of the tenant (lessee) and against the insurance company.

(CASUALTY INDEMNITY EXCHANGE, Appellant v. PENROD BROTHERS, INC., Appellee. Florida District Court of Appeal, Third District. No. 93-104. November 2, 1993. CCH 1993-94 Fire and Casualty Cases, Paragraph 4591.)