We often discuss the fact that in property insurance coverage cases, the policy is our road map. Also, how important the words and their meanings are in policies. Interpretations and facts are the deciding factors in coverage cases. A simple word like “reside,” may seem clear and be understood by most people. When you ask people on the street how they define the term, you may receive several different responses. When the facts of a case are applied to insurance policy coverage cases, coverage can hinge upon the words used in the policy and whether they are clearly used or defined. Consider a recent case from a New York Appellate Court.1 

The policyholders obtained a homeowners’ insurance policy for their property. The closing was scheduled to take place on March 31st, but was delayed until May 20th. On May 15th, a fire completely destroyed the house. The insurance company denied coverage and stated the dwelling was unoccupied at the time of the loss so it did not qualify as a “residence premises” under the policy. The trial court agreed with the insurance company’s interpretation, entered judgment in favor of the insurance company, and dismissed the case. The middle appellate court modified the order, concluding the “residence premises” requirement in the policy failed to define “resides” for the purpose of attaching coverage and that the policy was ambiguous under the facts of this case.

The policyholder claimed that between the date of the closing and the date of the fire he was generally at the property at least five days a week doing major renovations. He went after work between 4:00 and 5:00 p.m. and left no earlier than 10 p.m., frequently staying late into the night or early morning. He also built a table for eating purposes and ate at the house everyday, sometimes with other workers, slept there on several occasions.

The Court of Appeals, New York’s highest appellate court, held there were issues of fact as to whether the policyholder’s daily presence in the house, coupled with the intent to eventually move in, was sufficient to satisfy the policy’s requirements, and the term "residence premises" in the contract was ambiguous.

The case was sent back to the trial court for trial. There was a strong dissenting opinion in the case, which means one of the judges disagreed with the conclusion reached by the highest court, however, the outcome is controlling law. The policyholder will have his day in court.

1 Dean v. Tower Ins. Co. of N.Y., 2012 NY Slip Op 07142, 2012 WL 5256638 (C.O.A. N.Y. October 25, 2012)