Given the current state of the real estate market and the economy, it is not uncommon for a claim to involve a loss to property that was vacant when the loss occurred.  Between insureds who are unable to sell an investment property, who move out of a residence in advance of impending foreclosure, and who cannot find a tenant for a commercial property, many insurance companies are noting an increase in vacant properties and a concurrent increase in losses at such properties.  While states interpret and apply the definition of “vacant” and “unoccupied” differently, generally speaking courts look to factors including the effect of visits to the premises, the presence of furniture and appliances, any intent to reside at the premises, any repair or renovation of the property, and the condition of the premises at the time of the loss.

In Georgia, where the policy defines “vacant,” courts will apply that definition where the language is plain, unambiguous, and capable of only one reasonable interpretation.  Sorema North American Reinsurance Co. v. Johnson, 258 Ga. App. 304, 574 SE2d 377 (2002).  Where the policy does not define the term “vacant,” Georgia courts have looked to the general definition of the word, finding that it means “empty or deprived of contents or without inanimate objects.”  Knight v. U.S. Fidelity & Guaranty Co., 123 Ga. App. 833, 834-35, 182 S.E.2d 160 (1971). 

In Knight, the insured closed her business and left restaurant equipment and fixtures in the building for two years, at which point she decided to reopen and installed equipment, renewed utility service, and painted the kitchen, prior to a fire loss.  Based on these steps taken by the insured and the equipment present in the property at the time of the loss, the Court found that “it cannot be concluded as a matter of law that the premises were vacant” and reversed summary judgment so that the issue would be resolved by the jury.  Id. at 835-36; c.f. Sorema, 258 Ga. App. at 306-07 (distinguishing Knight where evidence did not suggest that insured engaged in such activities in sixty days prior to loss, warranting conclusion that building was vacant within terms of policy).

In American Mut. Fire Ins. Co. v. Durrence, 872 F.2d 378 (11th Cir. 1989), the only furnishings in the property were a refrigerator, stove, washing machine, and table, the utilities had been shut off for sixty days, and the last tenant had left several months earlier.  The Court determined that “[t]he house lacked amenities minimally necessary for human habitation and thus would reasonably be considered ‘vacant.’”  Durrence, 872 F.2d at 379.  On the other hand, in Fireman's Fund Ins. Co. v. Wofford, 182 Ga. 900, 187 S.E. 76 (1936), the Supreme Court of Georgia determined that a property was not vacant despite the tenant having left the house seventeen days before the theft, where the tenant left some furniture and books in the house.  The Court stated that “[t]he fact that furniture was left keeps the premises from becoming vacant,” and affirmed the trial court’s ruling refusing to grant a new trial and upholding the jury’s finding in favor of the insured.  Id. at 903-05.

The Alabama Court of Appeals has examined a number of factors, including the insured’s use of the dwelling, whether utilities were turned on, what furniture and particularly what appliances were installed, and whether anyone had slept in the dwelling, in evaluating whether the policy provision barring coverage if the dwelling was vacant or unoccupied would apply.  National Sec. Fire & Casualty Co. v. James, 358 So. 2d 737 (Ala. Civ. App. 1978).  In James, the insured owned a house previously belonging to his grandmother, and used the property as a storage place for materials to remodel a house across the street and to store furniture.  The utilities had been disconnected since the grandmother moved out, there was no stove or refrigerator in the house, and the insured believed no one had slept in the house since the grandmother moved. 

The court noted that the meaning of the terms “vacant” and “unoccupied” was a question of law, whereas the issue of whether the dwelling was vacant or unoccupied was a question of fact.  The definition of “vacant,” as that term is “commonly accepted in the insurance industry and by the general public,” means empty, without inanimate objects, containing nothing.  Id. at 739.  Turning away from further examination of vacancy, the court concluded that the meaning of “unoccupied” demanded the legal conclusion that the property was in fact unoccupied at the time of the loss, and thus there was no coverage.  Id.

Evaluating vacancy in Mississippi is similarly fact-intensive, and it appears that Mississippi is more willing to support a finding of vacancy where property remains at the house and occasional visits are made to the property.  In the cases of Asher v. Birmingham Fire Insurance Company, 239 Miss. 883, 125 So.2d 824 (1961) and Asher v. Old Colony Insurance Company, 240 Miss. 166, 126 So. 2d 255 (1961), which arose out of the same fire, the Mississippi Supreme Court held that the insured’s house was vacant where the tenant had been deceased for more than sixty days before the fire, despite the fact that some personal property including a bed had been stored at the house and a caretaker had spent at least two nights in the premises during the preceding sixty days.  See also, Home Insurance Company v. Scales, 71 Miss. 975, 15 So. 134 (1894) (house vacant where tenants abandoned property despite retaining key and leaving behind barrels, boxes, and papers).  Similarly, in Boston Insurance Co. v. Johness Realty Co., 254 Miss. 512, 183 So.2d 180 (1966), the Mississippi Supreme Court found that a property that contained articles of furniture and fixtures and which was occasionally looked after by a caretaker who lived in a cottage within 100 feet of the premises was nonetheless unoccupied and vacant under the terms of the policy.

Mississippi courts hold that vacancy is not cured by fleeting, periodic occupancy:  “[t]he term ‘occupied’ has been considered to imply a continuing tenure for a period of greater or less duration and not to embrace a mere transient or trivial use.”  (cits. omitted) Future Realty, Inc. v. Fireman's Fund Ins. Co., 315 F. Supp. 1109, 1115 (S.D.Miss.1970).  In Future Realty, the district court found that “proof of unoccupancy or vacancy … is overwhelming” where the tenant vacated the property and the insured then entered a verbal agreement with a new lessee and began to clean up the property in anticipation of the new lease, at which time a fire occurred.  Id. 1115.  In the same vein, prospective or future occupancy does not suffice to avoid a finding of vacancy.  See Home Ins. Co. v. Hardin, 162 Miss. 254, 139 So. 603 (1932) (fact that insured contracted with new tenant to occupy premises does not constitute occupancy).

Tennessee upholds policy provisions barring coverage for a loss occurring when the premises are vacant.  Provident Washington Ins. Co. v. Reese, 213 Tenn.355, 362, 373 S.W.2d 613, 616 (1963).  Whether a building is “occupied or vacant” depends on the nature and character of the building, the purpose for which it was designed, and the use contemplated.  Cashen v. Camden Fire Ins. Ass’n, 48 Tenn. App. 470, 348 S.W.2d 883 (1961).  In Cashen, the court found that the policy’s occupancy requirement was not fulfilled where the insured visited the building, formerly a restaurant, almost daily and stored personal property in the building.

Other decisions from Tennessee illustrate the emphasis courts place on whether the insured property was occupied by individuals as their customary and usual place of habitation.  An insured’s plans to reside at the premises at some future date, occasional inspection visits, or retention of some furniture in the dwelling is not sufficient to constitute occupancy and avoid a forfeiture of insurance coverage.  (citations omitted).  Hodges v. Exchange Mut. Fire Ins. Co., 1991 Tenn. App. LEXIS 752 (1991).  Similarly, the Court of Appeals has found that where certain personal property was stored in the house, the insureds visited the property to care for their dogs and garden, and spent the night in the house on occasion, this did not constitute use of the building as a residence, the purpose for which it was insured, and therefore the building was unoccupied as the term was used in the insurance policy.  Carroll v. Tennessee Farmers Mutual Ins. Co., 592 S.W.2d 894 (1979).

In applying this exclusionary provision, Florida notes the distinction that “vacancy” refers to inanimate objects and “occupancy” refers to animate objects.  Hehemann v. Michigan Millers Mut. Ins. Co., 240 So.2d 851 (1970).  In Hehemann, where the dwelling was devoid of all furniture except for drapes, the court found that the property was vacant as a matter of law.  On the other hand, the Court of Appeal has held that where an insured quit sleeping in a dwelling and slowly moved out his furniture such that some belongings remained at the time of the loss, the property was not vacant as a matter of law.  Independent Fire Ins. Co. v. Butler, 362 So. 2d 980 (1978).  The court in Butler then determined that a question of fact existed as to whether the property was unoccupied.  The court emphasized that occupancy is more a matter of intent and less a matter of someone’s continuous physical presence at the insured premises.  As in Tennessee, Florida courts construing the term “unoccupied” will examine factors such as the nature and character of the property, the purposes for which it is designed, and the use contemplated as expressed in the policy.  Id. at 982.

Therefore, the Southern states approach the same general concept of vacancy in slightly different manners, to place varying amounts of importance on different factors and to also distinguish between vacancy – as pertaining to items and contents – and occupancy – as pertaining to individuals.  Generally speaking, a number of common factors share importance, including the presence of furniture and appliances, the nature and use of the property, whether utilities are connected, and the number and frequency of visits and presence at the property. Regardless of state, this is a fact-intensive inquiry that will yield different results based on the circumstances surrounding the claim.