When Is a Home 'Unoccupied' Under a Homeowners Policy?

Question from an IIABNY member: In a strict reading on the homeowners policy, after a period of the home not being occupied, coverage becomes limited. The question came up on clients who leave their summer homes in New York to go to their winter residence, such as in Florida. We have a disagreement in our office as to whether the summer home would be considered unoccupied under the policy. Is there a clear answer to this?

Answer: I found a 1999 New York appellate court decision that appears to address your question. In McCabe v. Allstate, which pertained to a seasonal home located in Saratoga County, the judge wrote: 

We next review Allstate's contention that it was entitled to summary judgment due to the following loss exclusion: "Freezing of plumbing, fire protective sprinkler systems, heating or air conditioning systems or household appliances, or discharge, leakage or overflow from within the systems or appliances caused by freezing, while the building structure is vacant, unoccupied or being constructed unless you have used reasonable care to: (a) maintain heat in the building structure; or (b) shut off the water supply and drain the system and appliances." We find plaintiffs' assertion that their house was not "unoccupied" in light of their continuing, albeit seasonal use of the premises, to be unavailing. Inasmuch as plaintiffs' primary residence was in Virginia and they concede that no one resided at or visited the house in Edinburg from September 1995 until March 1996, their claim falls squarely within the exclusion provision. This Court has previously determined that use of the word "unoccupied" in an insurance policy carries its ordinarily accepted meaning and that "[i]t is the regular presence of inhabitants that makes occupancy" (Coutu v Exchange Ins. Co., 174 AD2d 241, 244; see, Page v Nationwide Mut. Fire Ins. Co., 15 AD2d 306, 306-307). [EMPHASIS ADDED]

This decision has been cited by a federal court as recently as 2009, so it appears to still be a valid precedent. Consequently, it appears that the coverage limitations do apply to a home in New York that is unoccupied during the winter months.

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Comments

[Mark Griffith]

We had a carrier deny a claim for freezing of pipes in just such a situation based upon unoccupancy. We successfully argued that the insured did use reasonable care to maintain heat. They had set the thermostat at 65 degrees and ordered the usual delivery of propane. Without their knowledge, the real estate agent, showing the vacation home to potential tenants, turned the heat up to 75 degrees. The furnace ran out of fuel prematurely causing the pipes to freeze. The insurer initially argued that the mere fact that the heat went off was proof that the insured did not take proper steps to maintain heat triggering the exclusion. We pointed to the "reasonable" language and finally prevailed.

[Don Reese]

This restriction only applies to the "freezing" of pipes, etc. in the home. There are numerous other NY case law situations in which the court holds that the insurer does not have the right to deny a claim based on their version of "unoccupancy". In addition, there is no common definition of "reasonable care", unless the insurer inserts such a definition.

[Tim Dodge]

Mark,
Congratulations on winning that battle. Don, I agree, the term "reasonable care" can be nebulous. I'm not a lawyer, but my understanding is that the standard is what an ordinary, reasonable, prudent person would do in that situation. Certainly Mark's insured appears to have met that standard.

Some carriers have had success denying claims in New York based on the "where you reside" clause, but that doesn't seem to be at issue in these situations.

[Jack]

This limitation only relates to the freezing of pipe joints, etc. in the property. There are several other NY situation law circumstances in which the trial maintains that the insurance provider does not have the right to refuse a declare according to their edition of occupancy. Moreover, there is no typical description of reasonable care, unless the insurance provider places such a description. thanks for sharing me...

[Kenneth W. Gibbons]

Tim, how does this affect other coverages, when the homeowner abandons the home and the bank keeps paying the insurance premiums? Fire and owner liability? thanks Ken.

[Tim Dodge]

Kenneth,
Regarding the Property coverage, the mortgage holder has coverage if it:

- Notifies the carrier of the change in occupancy or other substantial change in risk of which the mortgage holder is aware
- Pays any premium due on demand; and
- Submits a sworn proof of loss within the timeframe specified in the policy.

With regard to Liability coverage, since the insured no longer resides in the home, it may no longer fall within the policy's definition of "insured location." The policy excludes liability coverage for losses arising from premises that are not insured locations. This implies that the policy would not provide liability coverage for an abandoned home.