When investigating whether a homeowners’ policy provides coverage for an insured’s property loss, a threshold matter to always bear in mind is
When investigating whether a homeowners’ policy provides coverage for an insured’s property loss, a threshold matter to always bear in mind is whether the loss location was the insured’s “residence premises.” This issue is crucial because a typical homeowners’ policy will only provide dwelling coverage for the dwelling on the “residence premises,” and where the loss location was not the insured’s “residence premises” then there may well not be coverage for an otherwise covered loss. The term “residence premises” is usually defined as “the one or two family dwelling, other structures, and grounds or that part of any other building where you reside and which is shown as the ‘residence premises’ in the Declarations.” Simply put, to be a “residence premises” a dwelling must be listed on the declarations page of the insured’s policy, and the insured must reside in that dwelling.
Establishing where an insured “resides” is not a black and white issue controlled by where the insured happens to sleep on a particular night, or by where the insured keeps the majority of the his or her personal property. Rather, courts and juries will look at all of the circumstances surrounding the insured’s living situation when determining whether the insured resides in a particular location. Adding to the complexity of the issue is the fact that the Georgia courts have held that an insured can reside in multiple locations for insurance purposes—unless the applicable policy explicitly requires the insured to reside exclusively at the “residence premises.” It is not uncommon for an insured to spend a significant amount of time at one residence, yet remain eligible for dwelling coverage at another.
Thus, when an insurer anticipates that coverage may not exist for a loss due to the fact that the insured does not reside at the loss location, it is imperative to gather information which will allow the insurer to show a substantial disconnect between the insured and the loss location. Recently, the District Court for the Northern District of Georgia weighed in on the minimum connections necessary for an insured to establish that he or she resides at a loss location. In Lyons v. Allstate Ins. Co., a house owned by the insured was completely destroyed by fire. 2014 WL 494873 (2014). During its investigation of the loss, the insurer discovered that the insured did not use the loss location as her primary residence. The insurer established that the insured “never spent an extended period of time” at the loss location during the applicable policy period. Furthermore, the insurer uncovered that the insured did not receive her mail at the loss location and that her drivers’ license, tax returns, and bank statements all listed an address different than the loss location.
In arguing that she “resided” at the loss location for insurance purposes, the insured showed that: (1) she kept furniture and other personal property at that house; (2) the utilities remained on at that house: (3) she spent the night at that house on a few occasions during the one-year policy period; (4) she maintained the lawn; and (5) on one occasion she repaired termite damage she discovered at that house. The court held that these connections were not enough to establish that she “resided” at the loss location. The court reasoned that the insured’s failure to spend extended periods of time at the loss location could not be overcome by sporadic interactions with that property, especially in light of the fact that the insured made the effort to disconnect herself from that property by changing her address on legal and financial documents.
Based on the holding in Lyons, which is the most recent case law we have on the issue of “residence premises,” insurers should be looking for both subjective and objective evidence disassociating the insured and the loss location. That is, insurers should investigate the insured’s day-to-day relationship with the loss location along with how the insured represents his or her connection with the loss location to the rest of the world—such as where the insured directs the Post Office to deliver his or her mail, whether the insured tells the State and Federal governments that he or she is living at the loss location, and where the insured’s neighbors, friends, and employer understand the insured to live.
Moreover, as the Lyons opinion further illustrates, there are certain factors which will weigh more heavily on the “residence premises” analysis than others. Namely, time spent at the loss location appears to have a disproportionate influence on the outcome of the analysis. Accordingly, a disproportionate amount of the insurer’s investigation into determining the insured’s “residence” should be spent on finding out where the insured spends most of his or her time. Evidence which is particularly helpful in this respect includes the insured’s bank and credit card statements. Generally, financial statements give a clear picture of where an insured spends most of his or her time insofar as they show where the insured shops for groceries, buys gas, goes out to eat, and performs other day-today activities. Utility bills for the property in question are also helpful in determining whether an insured is spending time at the loss location. If the charges on a power bill are substantially below normal for the size and location of the property, that can be a clear indicator that no one is living in or consistently using the house. Finally, third-party witnesses, mainly neighbors, can be extremely helpful in determining the consistency with which an insured visits or resides at a particular location.
It is important to remember that the insured may reside in multiple locations, so it is not enough for the insurer to show that the insured has significant connections with another property. Rather, the focus of an insurer’s investigation when faced with a “residence premises” issue should be on showing the lack of a connection between the insured and the loss location. As the Lyons case highlights, the most influential evidence in this regard is showing a lack of time spent by the insured at the loss location, along with affirmative steps taken by the insured to disassociate his or herself with the loss location, such as changing their mailing address.