Are You Familiar with “The Sutton Rule?”

No, I'm not talking about the "Willie Sutton Rule,” made (in)famous by the U.S. bank robber who allegedly said "I rob banks because that's where the money is." I am talking about a rule derived from Sutton v. Jondahl, 532 P.2d 478 (Okla. App. 1975) and is the standard by which most states landlord/tenant subrogation laws are measured.

Simplified, the “Sutton Rule” holds that without explicit statements to the contrary, the tenant is presumed to be a co-insured on the landlord’s insurance policy. To wit, the landlord’s insurance carrier would have no right to subrogate against the negligent tenant. A tenant and landlord are automatically considered “co-insureds” under a commercial property policy, therefore the insurer of the landlord (after paying claim for damage as a result of the negligence of said tenant) may not attempt to subrogate from the tenant.

A report by Matthiesen, Wickert & Lehrer, S.C. explores landlord/tenant subrogation rules in all 50 states. Below are excerpts that may be helpful to our mid-Atlantic clients:

  • DISTRICT OF COLUMBIA Not applicable
  • MARYLAND A tenant’s liability for damage to the leased premises in a subrogation action brought by the landlord’s insurer after paying the claim should be determined by the reasonable expectations of the parties to the lease, as determined from the lease itself and any other admissible evidence. Rausch v. Allstate Ins. Co., 882 A.2d 801 (Md. 2005).
  • PENNSYLVANIA It depends on the lease language. If the lease requires the landlord to provide fire insurance, the landlord’s carrier cannot subrogate against the tenant. If the lease requires the tenant to obtain fire insurance, the landlord’s carrier can subrogate. Remy v. Michael D’s Carpet Outlets, 571 A.2d 446 (Pa. Super. 1990).
  • VIRGINIA A tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. Monterey Corp. v. Hart, 224 S.E.2d 142, 147 (Va. 1976) (subrogation denied because the lease contained “except fire” provision).

An effective risk management and insurance strategy can help to ensure this and other complex risk management questions are addressed effectively. I'm happy to speak with attorneys and owners alike to further discuss the impact of this rule and ways to mitigate these exposures. Please reach out to me at or 484.581.2813 to learn more.