What Does It Mean To "Reside" for Insurance Purposes?

PROPERTY – RESIDENCY REQUIREMENT – CHANGE IN OCCUPANCY – AGENT LIABILITY
Harrison v. Allstate Indemnity Co.
(Sup. Ct., Steuben Co., decided 3/3/2017)

In 2009 plaintiffs moved 5-6 miles from the insured dwelling, their home of more than 15 years, to live with and care for Mrs. Insured's ill mother.  They both changed the address on their drivers licenses and used their new address on their income tax returns. In July of 2010, Mr. Insured spoke with his Allstate agent to inform them that plaintiffs were living at the new address.  As a result of that contact, the billing address for policy renewals was changed to the new address, but no other changes were made to the policy itself.

At some point after the plaintiffs had moved, plaintiffs' two sons, a cousin, and a friend began staying at the insured dwelling at different times and for various amounts of time. The house was destroyed by a fire on August 30, 2012. After plaintiffs filed a claim for insurance coverage, Allstate disclaimed liability on the ground that, as plaintiffs had not resided in the home for nearly three years, the home did not meet the policy's definition of a covered "dwelling".

Plaintiffs sued Allstate and their agent and, after discovery, Allstate and plaintiffs moved for summary judgment.  In denying summary judgment to both sides, Steuben County Supreme Court Justice Marianne Furfure held:

In this case, the term "reside" is not defined in the policy and, therefore, it is possible that under the circumstances of this case, plaintiffs may be found to have resided at Pine Hill for insurance policy purposes even while they were caring for Mrs. Harrison's mother on Dodge Avenue for an extended period of time. While residency does require some temporary or physical presence, a degree of permanence and intention to remain at the property is a necessary component (Government Empls. Ins. Co. v. Paolicelli, id.; Yaniveth R. v. LTD Realty Co., Id.; Dean v. Tower Ins. Co. of NY, Id. at 708-709; Auerbach v. Otsego Mut. Fire Ins. Co., Id.). It is possible that, despite the length of time plaintiffs spent at the Dodge Avenue home, the average person might assume that regular maintenance and visits to the Pine Hill property during that time satisfied the policy's requirements (Dean v. Tower Ins. Co. of NY, Id. at 708-709). Plaintiffs' evidence that they had always intended that their absence from Pine Hill to be temporary and that they planned to return as soon as possible, coupled with the fact that they left all of their possessions at Pine Hill, continued to pay the taxes and make improvements to the property raises a question of fact whether, under these circumstances, plaintiffs have satisfied the insurance policy requirement that they reside in the insured premises. This question of fact precludes a grant of summary judgment to both parties (Dean v. Tower Ins. Co. of NY, Id.; cf. Vela v. Tower Ins. Co. of NY, 83 AD3d 1050 [2nd Dept. 2011]; New York Cent. Mut. Fire Ins. Co. v. Kowalski, 222 AD2d 859, 860 [3rd Dept. 1995]).  (Bold added.)

In rejecting Allstate's argument that there was a undisclosed change in occupancy to the home in breach of the policy's condition requiring notice of same, Supreme Court further held:

The term "occupancy", like the term "reside", is also not defined in the contract. Under the circumstances of this case, it is fair to assume that the average insured person may reasonable believe that notification is not necessary if the insureds, while residing at the property, have friends and family stay over for an extended and indefinite time. Before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemption apply in the particular case, and that they are subject to no other reasonable interpretation (Dean v. Tower Ins. Co. of NY, Id.; citing Seaboard Sur. Co. v. Gillette Co., Id.). The burden is on the insurance company to show that there is no material question of fact that the notification requirement applies in this case. Allstate has not met that burden because there is a question of fact, in the first instance, whether plaintiffs met the insurance policy requirement of residence and whether the presence of their sons, a cousin, and a family friend constitutes a change in the occupancy of the residence sufficient to trigger the notification obligation (Dean v. Tower Ins. Co. of NY, Id.). Therefore, Allstate's motion for summary judgment dismissing the complaint on the grounds that plaintiffs breached the insurance contract is denied.

Finally, the court declined to grant summary judgment dismissing the agent from the action. Allstate's records indicated that normal protocol when a mailing address change was made was to "question insured about use of property and if they were aware of insured not living there or letting others live there they would have changed to [landlords package] policy or discussed second residence".  In the court's opinion, this was sufficient to raise a question of fact regarding what plaintiffs advised the agent and whether there was a failure by Allstate's agent to follow company protocol or notify Allstate of the change in use, given their move to the in-laws' residence for that prolonged period of time.

Note:  This is a lower court decision.  I'll monitor for appellate treatment.