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Just reread the OP and it appears that the tenant has not caused major building damage AND he caused the fire through negligence. I would also recoup money from the tenant in this case (but would still go through insurance for major damage). If he didn't agree with this I would let it...

If it's LL insurance, that you take out because you have tenants in there that may damage the building (like 'people' can), then the insurance company pays for it. In this case, why would you chase the money from the tenant :confused: The thing you could do, is take them to the tribunal...