Intent to Return Does Not Satisfy Residence Premises Requirement
July 30, 2018
The United States District Court for the Western District of Pennsylvania has determined that a property owner was not entitled to insurance coverage for fire damage to her home where she had not lived for two years, despite indications that she had lived there including paying insurance premiums, mowing the lawn, making periodic visits, storing furniture there, and stating that she intended to return in the future. The case is Campbell v. State Farm Fire & Cas. Co., No. 2:18-cv-00292, 2018 U.S. Dist. LEXIS 119973 (W.D. Pa. July 18, 2018).
Sarah Campbell's home was damaged by fire in November of 2016. She had a manufactured homeowner's insurance policy (the Policy) issued by State Farm that provided benefits for property damage should the home be damaged due to a fire or other covered losses. At the time of the fire, Ms. Campbell was staying with her grandson because of some medical issues she was having, but maintained that she was planning on returning to her home. The policy premium was paid with no lapses in coverage. State Farm investigated and determined that Ms. Campbell had abandoned her house and denied the claim based on the assertion that she was not living in the home at the time of the loss. The policy defined residence premises as “where the insured resides and which is shown in the Declaration.” Ms. Campbell sued asserting that the fact that she intended to return home at a future date established “residence” within the meaning of the policy.
The district court determined that the policy language was not ambiguous, and for Ms. Campbell to receive appropriate coverage for damage to her property, she had to “reside” there. Under Pennsylvania case law, “resides” is defined as “a factual place of abode evidenced by a person's physical presence in a particular place.” The district court determined that although Ms. Campbell intended on returning to the dwelling at a future date, incidentally after the date of the loss, that intention did not establish “residence” and did not entitle her to coverage under her homeowner's policy for the loss. The district court also said that her maintenance of the property, visiting, paying insurance premiums, and keeping furniture there was insufficient to establish residency, because it was “undisputed that she had not lived there for two (2) years.” The district court concluded that Ms. Campbell failed to show that State Farm breached its duty to pay for the fire damage to the property.
Editor's Note: Generally, coverage is not provided to a home that the insured is not residing in. This is because the chance of loss increases dramatically when a dwelling is not occupied for extended periods of time. If no one is present, pipes will leak and burst, property will be vandalized, and other perils are more likely to occur unnoticed than if the property was occupied.
Many courts have decided that the “residence premises” language in the policy is unambiguous and have decided not to provide coverage for insureds who are not currently residing in the home, or who have non-insureds living in the covered home. ISO has developed a few forms that can be used to modify the definition of “residence premises” on a policy. One endorsement, if added to a homeowner's policy, can broaden coverage so that it applies even if an insured is not living at a premises, but is still paying the premiums for that residence. Another endorsement will allow the insured to dictate a starting and ending date for the removal of the residency requirement, so if the insured wants to move to their vacation home from October to March, they can remove the residency requirement on their home during that period, and if a peril occurs during that time coverage will apply.