Residence has long been the cornerstone of insurability in home insurance. Courts applying Pennsylvania law have held that residency is a prerequisite to insurance coverage under a policy insuring “residential premises”. For insured homeowners, this means that the insured must actually live in their home for it to be considered a covered residence under their home insurance policy. Unfortunately, several recent decisions by federal courts in Pennsylvania have interpreted this requirement very loosely, with unintended consequences for insurers.
The model home insurance policy – Bureau of Insurance Services HO 00 03 10 00 (the “HO-3”) – summarizes this concept through the following policy language:
SECTION I – PROPERTY GUARANTEES
A. Coverage A – Housing
- We cover :
a. The dwelling on the “living quarters” indicated in the statements. . . .
* * *
“Living quarters” means:
A. The single-family house where you reside;
B. The two-, three-, or four-family house where you live in at least one of the family units; Where
C. Part of any other building where you reside; and which is indicated as “living quarters” in the declarations.
* * *
In this policy, “you” and “your” mean the “named insured” listed in the Terms and Conditions. . . .
A crucial issue over which there has been much litigation is whether the insured actually “resides” in the insured property. Recent cases in the federal courts of Pennsylvania have dealt with this exact issue.
In Bobbi-Jo Isenberg v. State Farm Fire and Casualty Company, No. 21cv1147, 2022 WL 1720334 (WD Pa. May 27, 2022), the policy was issued to the plaintiff in 2018 when she purchased a home for repair in New Castle, Pennsylvania for $30,000. At the time of the purchase, the plaintiff lived in an apartment 2.1 miles away. The plaintiff continued to rent her apartment until 2021 while she carried out unexpected and extensive renovations to the house.
On May 13, 2020, a fire destroyed the home, prompting the plaintiff to file a claim under her homeowners insurance policy with State Farm. During its investigation, State Farm rescinded the policy because it believed the complainant did not reside on the property, but still lived in the apartment with her family. The plaintiff subsequently filed an action in the Pennsylvania Court of Common Pleas, Philadelphia County and State Farm remanded the case to federal court. State Farm eventually filed a motion for summary judgment, saying that because the plaintiff did not use the house as a residence, she could not obtain coverage under the policy. The plaintiff argued that her actions in relation to the house qualified the house as a resident and that she resided in both the house and the apartment. The court sided with the plaintiff.
Reviewing the existing case law regarding the terms “living quarters” and “resident”, the Court noted the following:
“Under Pennsylvania law, the construction of the term ‘resident’ in an insurance policy is a matter of law.” Mu’min c. Allstate Prop. & Case. Ins. Coco., Civil Action No. 10-7006, 2011 WL 3664301, at *9 (ED Pa. 17 August 2011). The Pennsylvania courts have held that the word “resident” in an insurance policy, although not defined, is unambiguous. Wall Rose Mut. Ins. Co. c. Manross, 939 A.2d 958, 964 (Pa. Super. Ct. 2007). “Residence” refers to “a factual place of residence evidenced by a person’s physical presence in a particular place”. Audience in residence in front of Bd. de Sch. Dirs., Cumberland Valley Sch. Dist., 560 Pa. 366, 744 A.2d 1272, 1275 (2000) (internal citations and citations omitted). The term “requires, “at a minimum, some measure of habitual permanence or repetition.” ” Wall rosette939 A.2d at 965 (citing Erie Ins. Scale against Weryha, 931 A.2d 739 (Pa. Super. Ct. 2007)). “Also, ‘[s]Since residency is a matter of physical fact, intent is not a relevant consideration. Identifier. (citing Amica Mut. Ins. Coco. v. Donegal Mut. Ins. Coco., 376 Pa.Super. 109, 545 A.2d 343, 348 (1988)); see also Campbell, 2018 WL 3468214, at *1 (“Plaintiff’s reliance on her intention to return to the dwelling at a later date…does not establish ‘residence’.”).
When investigating residence, courts look at objective indicators “such as where a person sleeps, eats meals, receives mail and stores personal property”. Allstate Ins. Co. c. NaskidashviliCivil Action No. 07-4282, 2009 WL 399793, at *3 (ED Pa. February 16, 2009); see Chen2012 WL 460416, at *6; Mu’Min, 2011 WL 3664301, at *9. “[W]When a person actually lives in one place and visits sporadically or keeps certain personal items in another place, it is the place where he lives that is his residence”, not the place he visits sporadically. Gardner544 F.3d at 560.
The court ultimately determined that the plaintiff resided at the property. The court found it compelling that the plaintiff spent many nights at home; she was present on the property every day – or at least three to four days a week – working on the house to make it habitable; the house was filled with his personal effects; the plaintiff paid her property taxes and utility bills for the house; the plaintiff’s pay stubs listed the home as the address; and there was no evidence that the claimant attempted to rent or sell the property (the claimant planned to move into the house at the end of July 2020). Thus, the court found that the plaintiff had constant, habitual, daily contact with the house for the express purpose of carrying out renovations so that she could move into the house with her full-time family, so that the house should be considered one of the applicant’s residences under the home insurance policy issued by State Farm.
But did the court get it right? It seems that a number of issues have been overlooked.
The first (and most obvious) is the plaintiff’s literal admission that she had not “lived” or “resided” in the house from 2018 to the May 2020 fire. While the court chose to focus on other facts cited above—such as the plaintiff spending nights and working at the property—it is unclear how the court could have so casually dismissed the plaintiff’s own conclusion.
Second, the court appears to have overlooked relevant facts about the domicile. Much of the evidence uncovered during this case appears to support State Farm’s position: the water was not turned on at the house; the electrical service was not fully functional; the utility bills for the apartment showed heavy usage and were included in the monthly rent for her 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 the school where the address of the apartment was located, not that where the house was located; and the apartment address was used on his credit card and bank statements, health insurance information, vehicle registration, and even dog licenses. Besides, the renovations to the house weren’t even complete: there were no walls or ceilings in the master bedroom or the living room; the other two bedrooms in the house were unpainted and the floor was unfinished; and the bathroom tile and vanity were not installed. Thus, the plaintiff’s testimony during her deposition in January 2022 that she spent “97% of her time at the property”, including overnight stays, seems suspect.
Finally, and most concerning, is the fact that the Court could have decided this case on the basis of form rather than substance. The question of what it means for a person to actually reside in a property should not be considered mechanically, with the Court keeping a tally on a scorecard to determine whether the plaintiff can muster enough points in various categories such as ” physical presence in a particular place,” and “a measure of habitual permanence or repetition” to determine, in the abstract, whether the insured “resident” in a particular property. Rather, the main issue should be whether the person actually lived at home. See Bobbi-Jo Isenberg2022 WL 1720334, at *4 (citing Gerow v. State Auto Prop. & Case. Co., 346 F. Supp. 769, 779 (WD Pa. 2018)) (“‘[w]When a person actually lives in one place and visits sporadically or keeps some personal items in another place, it is the place where he lives that is his residence, not the place he visits sporadically. “). Also, although it is possible to have more than one residence, normally a second residence is seasonal or for business purposes, not simply another place where one spends a large part of one’s time, such as at work. .
A similar result was obtained in Mary Pierre c. Universal Property & Casualty Insurance Company, no. 20-6537, 2022 WL 911386 (ED Pa. 29 March 2022). Here, the plaintiff maintained a home insurance policy covering her home in Reading, Pennsylvania when a fire occurred on July 3, 2019, damaging her home and contents. The plaintiff reported the loss to the carrier, but the carrier denied coverage because it determined that the plaintiff was not “residing” at the home at the time of the loss.
In fact, the plaintiff had admitted that she had “moved” from the insured property months before the fire. When asked if she was living in the insured property at the time of the fire, she replied, “No. I lived in . . . my house,” referring to a different property that she referred to as her “primary residence.[ce].”
Cover? According to the court, maybe. Finding that this was a question of fact for a jury, the court said “the record contains substantial conflicting evidence as to whether the plaintiff was residing at the insured property at the time of the fire”. Despite the plaintiff’s admission that she had “moved out” before the fire and resided “primarily” in another house, the court was persuaded by the plaintiff’s statement that “the insured property was a “family home” where her daughter, son, grandchildren and nephew lived and she was “always” there. Indeed, “she had furniture, a television, internet, and received mail in both properties. . . paid the insurance premium for the insured property,” shared utility payments with her daughter at the insured property, and still had her “own room” at the insured property.
Unfortunately, it seems that the courts tend to ignore the best proof of residence – the insured’s own admission that the property was not her “home” or that she did not “live” there. The courts should start coming to the same conclusion.