Introduction

 The definition of "residence premises" is key to any homeowner property policy. It defines the property being insured. Not only must the insured have an interest in the property, but the standard definition requires the insured to be living in the property. The residence premises standard definition is a one- to four-family dwelling where the insured resides, or the two-, three-, or four-family dwelling where the insured resides in one unit of that dwelling, or that part of any other building where the insured resides as long as the premises is listed in the declarations page. This is because unattended property is subject to more hazards: break-ins, broken pipes, and short circuiting electronics can all wreak havoc when the insured is relying on friends, neighbors, or relatives to check up on the property "now and again."

 ISO has received questions on this from agents regarding various cases where the court found for the carrier that the property was not covered because it was unoccupied. One case is Shepard v Keystone Ins Co, 743 F. Supp. 429, 430 (D. Md. 1990), in which the home had been unoccupied for two years. The court found for the carrier that there was no coverage for the fire due to the unoccupancy of the dwelling. Bolivar v. Blue Ridge Ins. Co., No. CV 980353522, 1999 WL 989585 (Conn. Super. Oct. 19, 1999) is similar in that the insureds purchased a home and insured it but did not live there. The court found that the homeowners policy was intended to insure premises where the insured resides and that the language was clear and unambiguous.

However, in another case, Hill v. Nationwide Mut. Fire Ins. Co., 448 S.E.2d 747 (Ga. App. 1994), the court found coverage for a fire loss although the insured had moved out of their home. The court held that the "where you reside" language does not impose residency requirements but serves only to identify the covered premises.

 In part because of such cases and in part because of the concern of agents, ISO developed these new endorsements to clarify the residency requirement of homeowners, condominium, and mobilehome forms. The change in language also makes it clear that after renewal there would be no coverage since at inception the insured was not living at the residence. However the magnitude of the insuring of unoccupied dwellings during the first policy term cannot be underestimated. Although an insured might ask friends, neighbors, or relatives to keep and eye on the premises, the volunteer caretakers may not be a diligent as required, and even so, a lot can happen to a dwelling between the Sunday afternoon visit and the Thursday afternoon visit. While theoretically leaving the insurer open for loss for only one policy term, the risks are still significant, and nothing says an insure cannot annually return to the dwelling for a one week period when the policy renews or change polices annually, putting various carriers at risk by staying in the house just long enough to put a new policy in force. While this action may not be likely, it is possible.

HO 06 48 Residence Premises Definition Endorsement

 DEFINITIONS

 Analysis

Endorsement HO 06 48 10 15, Residence Premises Definition Endorsement, applies to the HO 03 and replaces that definition of "residence premises." The definition is the same except for the phrase "on the inception date of the policy period shown in the Declarations." This phrase significantly modifies the policy by making the residency requirements apply only when the policy first incepts, and not later. The insured can move out the next day and leave the property unoccupied and still have coverage. Unoccupied is not the same as vacant; "vacant" is when the property is empty of sufficient property to make the dwelling livable, such as beds, refrigerator, and stove. "Unoccupied" means the property still has its contents, just no occupants. So the vacancy exclusion will not protect the carrier, even if the property is left unoccupied for six months.

 HO 06 49 Broadened Residence Premises Definition Endorsement

DEFINITIONS