While insurance companies must always be mindful of actions or statements that may later come back to haunt them by operating as a waiver of certain
While insurance companies must always be mindful of actions or statements that may later come back to haunt them by operating as a waiver of certain policy provisions or exclusions, a recent decision from the Northern District of Georgia provides an example of behavior that did not constitute a waiver, and also illustrates the importance of the insured’s residence at the property when a standard homeowners policy is in place. InMahens v. Allstate Ins. Co., 2011 U.S. Dist. LEXIS 36125 (N.D. Ga. 2011), the federal court applied Georgia law to conclude that where an insured never occupied his insured property and where the policy required that the insured reside at the property, there was no coverage for severe damage caused by a water leak. What’s more, the insurer did not waive its right to deny coverage despite its assurances that it would pay for tens of thousands of dollars in repair costs that the insurer allegedly initiated.
In Mahens, the insured purchased a home in Marietta, Georgia in 2006 and obtained a policy of insurance on the property through Allstate. Although the insured intended to live at this property, he remained in Florida and never moved into the house in Marietta. The property remained unoccupied for a number of months, during which time the insured’s real estate agent and an apparent caretaker visited the property periodically. The caretaker claims to have heated the property with portable electric and kerosene heaters when the temperature fell below 40 degrees Fahrenheit, as the property had no central heating.
After the property had been unoccupied for approximately eight months, the caretaker discovered a water leak in March 2009. The caretaker called a plumber, who reported that the leak was caused by frozen pipes. The claim was reported to Allstate, who advised that the damage would not be covered under the policy, because the policy excluded coverage for damage caused by frozen pipes while the residence is vacant unless the insured uses reasonable care to maintain heat in the home. The insured’s real estate agent then obtained a second opinion from another plumber, who concluded that a small leak developed in the pipes and slowly began saturating the floors of the home.
Later in March 2009, Allstate arranged for an independent expert adjuster to inspect the property. The independent expert adjuster conferred with the insured’s real estate agent and caretaker, as well as with a representative of Integrity Renovation and Remodeling, Inc., to discuss the steps necessary to repair the property. The independent adjuster authorized Integrity to remove the ceiling and walls and commence other repairs, and indicated that Allstate would pay Integrity for the work. On March 30, 2009, after repair work had commenced in earnest, Allstate notified the insured’s real estate agent to inform her that Allstate would issue her payment for $42,366.00. Two months later, Allstate then informed the real estate agent that it would not pay the claim. The insurer offered to settle with Integrity for $15,000 if the insured agreed to release all claims against Allstate for the damage. Instead, the insured filed suit to recover under the policy.
Both parties moved for summary judgment, the insured arguing that the loss is covered under the policy and Allstate waived its right to deny coverage, and Allstate arguing that there was no coverage because the insured did not reside at the property and because damages caused by a slow leak are excluded by the policy. The court promptly disposed of Allstate’s argument that the loss was excluded from coverage based on the policy’s slow leak exclusion, because when drawing all inferences in favor of the non-moving party the court could not say as a matter of law that the leak continued for a period of weeks, months, or years, as provided in the exclusion.
The court then turned to Allstate’s argument that the policy did not provide coverage for the loss because the insured failed to reside at the property, as required by the policy. Specifically, the policy provided coverage for the insured’s “dwelling including attached structures,” and “Dwelling” is further defined as “a one, two, three or four family building structure, identified as the insured property on the Policy Declarations, where you reside and which is principally used as a private residence.”
In evaluating the policy’s residence requirement, the court examined the application of the residence premises requirement and “dwelling” definition in recent Georgia decisions. In Georgia Farm Bureau Mutual Insurance Co. v. Kephart, 211 Ga. App. 423, 439 S.E.2d 682 (1993), the plaintiff sued to recover for fire damage where he was not living in the property at the time of the loss. The policy in Kephart similarly provided coverage for “the dwelling on the residence premises” defined as “the one family dwelling . . . or that part of any other building; where you reside and which is shown as the ‘residence premises’ in the Declarations,” and the court in that case held that the policy did not cover the loss because the insured was required to live in the residence listed on the declarations page.
The Georgia Court of Appeals dealt with similar policy language in Grange Mutual Casualty Co. v. DeMoonie, 227 Ga. App. 812, 490 S.E.2d 451 (1997), where the policy provided coverage for the “residence premises,” defined as “the one or two family dwelling where you reside.” In that case, the Court also concluded that the policy required the insured to live at the residence premises, and any other provisions or exclusions in the policy did not negate the residence requirement.
Finally, the Court noted that the decision in Hill v. Nationwide Mutual Fire Insurance Co., 214 Ga. App. 715, 448 S.E.2d 747 (1994), emphasizes the controlling importance of the specific policy language in each case. In Hill, the policy provided coverage for “the dwelling on the residence premises,” however this term was defined differently than in the above two cases. In that case, “Residence premises,” was defined as “the one- or two-family dwelling, other structures and grounds; or that part of any other building where you live, shown as the residence premises on the Declarations.” Because of the punctuation and phrasing, the court in Hill found that the policy did not require the insured to live in the residence premises, as the definition covered both family dwellings and parts of other buildings “where you live.” The court found that the lack of punctuation after “where you live” meant that the phrase only modified “that part of any building,” and thus the policy covered that part of any building where the insured lived as well as “the one- or two-family dwelling” regardless of whether the insured resided there.
In the case at issue, the court observed that the “Dwelling” definition was worded to require the insured to reside at the property, and thus the definition was comparable to those in Kephart and DeMoonie and distinguished from the definition in Hill. The insured echoed the plaintiff’s argument in DeMoonie that particular policy exclusions contemplate coverage even when the property is unoccupied, such as the exclusion for damage caused by freezing temperatures while the premises are unoccupied. However, the court found that the “Dwelling” definition was not ambiguous, and followed the DeMoonie court in concluding that such exclusions do not negate nor conflict with the requirement that the insured actually reside at the insured premises. The court pointed out that situations may exist where the property would be temporarily vacant, as when the insured was away on vacation, even while the insured still resided there.
The insured next argued that Allstate had waived any right to deny coverage by its actions and statements indicating that it would pay Integrity for repair work and attempting to settle with Integrity. The court likened the present situation to the one in Danforth v. Government Emps. Ins. Co., 282 Ga. App. 421, 638 S.E.2d 852 (2007), where the insured argued that the insurer was estopped or had waived its right to deny coverage when the insurer stated without a reservation of rights that the policy provided excess coverage, paid property and personal injury damages, commenced a defense of the insured, and did not seek a stay of the underlying tort action. The court held that the doctrines of implied waiver and estoppel, based upon the conduct or action of the insurer, would not bring within coverage risks or losses that were not covered or were expressly excluded by the terms of the policy. Because the loss in the present case was not covered under the policy, Allstate’s assurances that it would pay for repairs and its attempt to settle with Integrity did not waive the requirement that the insured reside at the dwelling.
The court also disposed of the insured’s argument that Allstate was estopped from denying coverage because it had knowledge that the insured was not residing at the property. At the insured’s direction, his Allstate agent mailed his policy renewal to his Florida residence, thus ostensibly making Allstate aware that he was not residing at the property. The court disagreed, holding that, because the policy provided that “the policy can be changed only by endorsement” and there was no endorsement in this matter, Allstate was not estopped from denying coverage even if it had actual knowledge that the insured was residing in Florida at the time of the loss.
Thus, the court granted summary judgment for the insurer and denied the insured’s request for summary judgment. Despite the insurer’s assurances that it would pay for repair and its efforts to settle the costs of repair, such actions did not result in a waiver, where the policy did not provide coverage. Similarly, even the insurer’s actual knowledge of non-residency was held not to waive or estop the insurer from finding no coverage due to the property being unoccupied. The insured’s failure to meet the policy’s residence requirement trumped these subsequent actions by the insurer, and there was no coverage for the loss. This case provides a vivid illustration of the importance of the residence requirement and the definition of the term “dwelling” in the policy.