You don’t need a law degree to realize that a typical contract is going to have at least some technical language that requires professional legal interpretation.
But what can still trip up policyholders reviewing the language in their coverage are words that sound simple but have unclear or disputed meanings.
Take today’s example: the word “reside.” What does it mean to reside somewhere? Everyone knows what it means in a general sense, but ask five different people to be more precise, and you’ll likely get five different explanations.
What Does It Mean for Someone To Reside?
Consider a recent course for a New York Appellate Court.1 The policyholders obtained a homeowners’ insurance policy for their property. The closing was scheduled for March 31st but was delayed until May 20th. On May 15th, a fire completely destroyed the house. The insurance company denied coverage, stating that the dwelling was unoccupied at the time of the loss, so it didn’t 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. However, 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.
Does “Reside” Mean Sleep?
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 p.m. and 5:00 p.m., left no earlier than 10:00 p.m., and frequently stayed late into the night or early morning. He also built a table for eating meals and ate at the house everyday, sometimes with other workers, and 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 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.
Learn More About the Meaning of “Reside” in Insurance Contracts
Regular readers of this blog realize residency is a critical issue — one that can lead to some risky situations for your coverage when there’s any ambiguity about where you live. For more about the meaning of the word “reside” and the issue of “residence premises,” check out:
- “Residence Premises” and Other Killer Exclusions, Part One
- “Residence Premises” and “Where You Reside” Insurance Coverage Gaps—The Killer Exclusion That Is Not Listed as an Exclusion: Part Two
- Move Out and Lose Coverage—Common Property Insurance Minefields Caused by Changes of Residency
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