HO Policy Only Covers Building Located at Address on Declarations

The U.S. District Court for the Southern District of Illinois recently granted State Auto Property and Casualty Insurance Company (SAPCIC)'s motion for summary judgment dismissing an insured's lawsuit, which alleged SAPCIC had wrongfully denied a claim for coverage to an insured dwelling (the "House") that was damaged by fire. The case is Schuchman v. State Auto Prop. & Cas. Ins. Co., 2012 U.S. Dist. LEXIS 91569 (U.S. Dist. July 3, 2012).

The plaintiffs had purchased a homeowners insurance policy on the House from the SAPCIC in 2000. At some point between 2000 and 2005, however, the plaintiffs relocated to two mobile homes located on a contiguous portion of the insured premises but with different mailing addresses than the House. After fire damaged the House in 2010, the plaintiffs submitted a claim to SAPCIC. The insurer denied the claim on the basis that the plaintiffs had not been using the House as their "residen[tial] premises," a clear violation of the insurance agreement ("the residence premises is the only premises where you maintain a residence other than business or farm properties"). After filing suit, the plaintiffs sought a declaration that they were entitled to coverage for repair of the House.

The plaintiffs did not dispute that they did not live in the House at the time of the fire. Instead, they asserted their belief that the term "residence premises" included other structures and grounds at the insured location -- that is, the mobiles homes where they had been living a mere 200 feet away. The court disagreed with this interpretation of the policy, finding instead that the plaintiffs were attempting to expand the meaning of the term "residence premises" to include an address not explicitly listed in the declarations of the insurance policy. The court explained that, as a general rule, "when an insurance policy describes property by a specific description, as in an address, it should not be construed as encompassing other addresses not specifically stated in the policy." Accordingly, the court held that the policy unambiguously covered the stated address and that address alone. As a result, the plaintiffs had been maintaining a residence outside of the "residence premises" in violation of the agreement.

The plaintiffs argued that coverage did not depend on whether the insured physically resided in the "residence premises," noting the close proximity of their mobile home residence to the House. However, the court rejected this argument, finding strong support in caselaw from other jurisdictions that the language "where you reside" necessarily requires residency in the insured dwelling. The court was unwilling to construe the term "residence premises" as encompassing other unattached dwellings that might exist at the same property location, particularly when the two dwellings each had their own separate mailing address. Accordingly, the court granted summary judgment for the insurer, dismissing the plaintiffs' suit entirely.

The court was strongly guided by the declarations section of the insurance policy itself and showed a reluctance to expand coverage to property not explicitly listed/described under the agreement. The case illustrates the importance that policy declarations play in delineating the scope of a policy's coverage.

Patrick B. Omilian of Goldberg Segalla LLP, Buffalo, New York, wrote the case of the month summary.