Residence permits have long been the touchstone of insurance when it comes to homeowner insurance. The courts applying Pennsylvania law have ruled that residence is a precondition for insurance coverage under a “residential” insurance policy. For insured homeowners, this means that the insured actually have to live in their home for it to be considered housing covered by their homeowners policy. Unfortunately, several recent federal court decisions in Pennsylvania have interpreted this requirement very loosely, with unintended consequences for insurers.
The Model Homeowners Insurance Policy—HO 00 03 10 00 of the Insurance Services Administration (“HO-3”)—reflects this concept through the following policy language:
SECTION I. PROPERTY COVERAGE
A. Coverage A – Housing
- We cover:
a. Dwelling on “Living spaces” indicated in the declarations. . . .
* * *
“Living spaces” means:
A. Single family housing where do you live;
B. House for two, three or four families where do you live in at least one of the family units; or
C. That part of any other building where do you live; and which is listed as “dwelling” on the declarations.
* * *
In this policy, “you” and “your” refer to the “named insured person” listed on the Declarations. . . .
The critical issue, which has been the subject of much litigation, is whether the insured actually “resides” in the insured property. Recent cases in federal courts in Pennsylvania dealt with precisely this issue.
AT Bobby-Jo Isenberg v. State Farm Fire and Emergency Company, No. 21cv1147, 2022 WL 1720334 (WD Pa. May 27, 2022), the policy was issued to Plaintiff in 2018 when she purchased a renovated home in New Castle, Pennsylvania for $30,000. At the time of the purchase, the plaintiff lived in an apartment 2.1 km from the house. The plaintiff continued to rent out her apartment until 2021, while she was engaged in unexpected and extensive repairs to the house.
On May 13, 2020, a fire destroyed the home, prompting the plaintiff to file a claim under her State Farm homeowners insurance policy. During the course of the investigation, State Farm canceled the policy because it believed that the plaintiff did not reside in the home, but still lived in the apartment with his family. Plaintiff subsequently filed suit in Pennsylvania General Court, Philadelphia County and State Farm, and the case went to federal court. Ultimately, State Farm filed a motion for summary judgment arguing that because the plaintiff did not use the home as a residence, she could not benefit from the policy’s coverage. The plaintiff argued that her actions in relation to the house qualified the house as a dwelling and that she lived in both the house and the apartment. The court sided with the plaintiff.
Analyzing the existing judicial practice in relation to the terms “residential premises” and “residential premises”, the court noted the following:
“Under Pennsylvania law, the use of the term ‘resident’ in an insurance policy is a matter of law.” Mu’Min vs. Allstate Prop. & Cas. Inc. Co., Civil Action No. 10-7006, 2011 WL 3664301, at *9 (ED Pa. August 17, 2011). Pennsylvania courts have ruled that the word “resident” on an insurance policy, even if not defined, is unambiguous. Wall rose Mut. Inc. Ko vs Munross, 939 A.2d 958, 964 (Pa. Super. Ct. 2007). “Residence” means “the actual place of residence, as evidenced by the physical presence of a person in a particular place.” Residence hearing in front of Bd. S. Dirs., Cumberland Valley Sch. Dist., 560Pa. 366, 744 A.2d 1272, 1275 (2000) (citations and internal citations omitted). The term “requires at least some measure of persistence or habitual repetition”. ” wall rose939 A.2d at 965 (quoting Eri Ince. exchange with. Weriha, 931 A.2d 739 (Pa. Super. Ct. 2007)). “Also, ‘[s]since resident status is a matter of physical fact, intent is irrelevant.” Identifier. (quoting Amika Mut. Inc. Co. against Donegal Mut. Inc. Co., 376 Pa. Super. 109, 545 A.2d 343, 348 (1988)); see also Campbell, 2018 WL 3468214, at *1 (“The plaintiff’s hope for his intention to return to the home in the future…does not establish “residence.””).
When checking residence, courts look for objective indicators, “for example, where a person sleeps, eats, receives mail, and stores personal items.” Allstate Inc. Ko vs NaskidashviliCivil Action No. 07-4282, 2009 WL 399793, at *3 (ED Pa. February 16, 2009); see Chen2012 WL 460416, at *6; Mumin, 2011 WL 3664301, at *9. “[W]When a person actually lives in one place and occasionally visits or stores certain personal items in another place, it is the place where he lives that is his place of residence, and not the place he visits from time to time. Gardner544 F.3d at 560.
Ultimately, the court found that the plaintiff lived in this house. The court found it convincing that the plaintiff spent many nights in the house; she was on the property every single day—or at least three or four days a week—working to make the house habitable; the house was filled with her personal belongings; the plaintiff paid property taxes and utility bills for the house; the plaintiff’s pay stubs list her home as her address; and there was no evidence that the plaintiff attempted to rent or sell the property (the plaintiff planned to move into the house at the end of July 2020). Therefore, the court concluded that the plaintiff had constant, routine, daily contact with the house for the express purpose of completing the renovation so that she could move into the house with her family on a permanent basis, so that the house should be considered one of the plaintiff’s residences under the terms of a homeowner’s insurance policy issued by the state farm.
But did the court understand this correctly? Apparently, there are a number of issues that may have been overlooked.
First (and most obvious) is the fact that the plaintiff literally admitted that she had not “lived” or “lived” in the house from 2018 until the fire in May 2020. Whereas the court chose to focus on the other facts above. – for example, the plaintiff is staying overnight and working on the property—it is not clear how the court could so carelessly dismiss the plaintiff’s own conclusion.
Second, the court appears to have missed important facts about the house. Much of the evidence unearthed in this case seems to support the state farm’s position: the water was not turned on in the house; the electricity supply was not fully functional; utility bills for the apartment showed significant usage and were included in her monthly rent for the apartment; the address of the apartment was used on the plaintiff’s tax returns (which were filed in 2020); her minor children of school age attended school at the address of the apartment, and not at home; and the apartment’s address was used on her credit card and bank statements, health insurance information, vehicle registration, and even her dog licenses. Moreover, the renovation of the house was not even completed: there were no walls or ceilings in the master bedroom and living room; the other two bedrooms in the house were not painted and the floor was not filled; and the tiles in the bathroom and the vanity were not installed. Thus, Plaintiff’s January 2022 testimony that she spent “97% of her time at the property”, including sleepovers, appears suspicious.
Finally, and most troublingly, the Court could decide this case based on form rather than content. The question of what it means for a person to actually live in a property should not be dealt with mechanically, as the Court keeps score on the scorecard to determine if a claimant can score enough points in various categories such as “physical presence in a particular place,” and “some measure of persistence or habitual repetition” to determine, in the abstract, whether the insured “resident” in the property. Rather, the overarching theme should be whether or not the person actually lived in the house. See Bobby Joe Isenberg2022 WL 1720334, in *4 (citing Gerow v. State Auto Prop. & Cas. Co., 346 F. Add. 769, 779 (WD Pa. 2018)) (“‘[w]When a person actually lives in one place and occasionally visits or stores certain personal effects in another place, it is the place where he lives that is his place of residence, and not the place he visits from time to time. Moreover, while it is possible to have more than one place of residence, usually the second place of residence is seasonal or used for business purposes, and not just in another place where a person spends most of his time, such as at work.
A similar result was achieved in Marie Pierre v. Universal Property and Casualty Insurance Company, No. 20-6537, 2022 WL 911386 (ED Pa. March 29, 2022). Here, Plaintiff retained a homeowners insurance policy covering her home in Reading, Pennsylvania when a fire broke out on July 3, 2019, damaging her home and property. The claimant reported the loss to the carrier, but the claimant denied coverage because it determined that the claimant was not “living” in the home at the time of the loss.
In fact, Claimant acknowledged that she “moved out” of the insured property months before the fire. Asked if she was living in an insured home at the time of the fire, she replied, “No. I lived in . . . my home,” referring to another property she described as her “principal residence.”[ce]”.
Coating? According to the court, it is possible. Finding it to be a question of fact for the jury, the court stated that “the record contains substantial conflicting evidence as to whether the plaintiff was living in the insured property at the time of the fire.” Although the plaintiff admitted that she “moved out” before the fire and “mostly” lived in another house, the court was convinced by the fact that the plaintiff said that “the insured property was the ‘family home’ in which her daughter, son, grandchildren and nephew lived, and she was “always” there.” Indeed, “she had furniture, a TV, the Internet, and received mail in both houses. . . paid an insurance premium for the insured property”, shared utility bills with her daughter in the insured property, and at the same time had “her own room” in the insured property.
Unfortunately, there seems to be a tendency for courts to ignore the best evidence of residence – the admission by the most insured that the property was not her “home” or that she “did not live” there. The courts should start coming to the same conclusion.