Demise, divorce, illness, incapacity and wealth typically result in conditions the place individuals might change properties or have a number of locations to reside. Anytime these occur, policyholders should be cautious that their residential insurance coverage insurance policies don’t cease offering full protection. This can be a vital problem, as I famous in “Residence Premises” and Different Killer Exclusions, Half One.
The current ruling in Curt Adkisson v. Safeco Insurance coverage Firm of Indiana 1 is a important reminder of this problem for policyholders and that the interpretation of “residence premises” in home-owner’s insurance coverage insurance policies can unknowingly hang-out them. This Texas case illustrates how disputes over occupancy, emptiness and utilization of the premises can decide whether or not an insurance coverage declare is accepted or denied. For owners, the teachings discovered from this case emphasize the significance of proactive communication with their insurance coverage brokers and sustaining readability in regards to the standing of their insured properties.
Case Background
In February 2021, a historic freeze struck Texas, resulting in widespread property harm. Curt Adkisson’s house in Longview, Texas, sustained vital water harm after pipes burst in the course of the freeze. Though Adkisson filed a declare beneath his Safeco home-owner’s coverage, Safeco denied protection, citing the coverage’s “freezing exclusion” for vacant or unoccupied dwellings the place affordable care to take care of warmth or shut off the water provide had not been exercised.
Mr. Adkisson contested the denial, asserting that the property was not vacant or unoccupied and that he had taken affordable care. The dispute culminated in Safeco’s movement for abstract judgment, which the court docket in the end granted. Central to the court docket’s determination was its interpretation of whether or not Mr. Adkisson “resided” on the property, as required by the coverage.
Safeco argued that Mr. Adkisson’s property didn’t qualify as his “residence premises” on the time of the loss. Based on Safeco, Mr. Adkisson primarily lived in Godley, Texas—a property he bought in 2020, nearer to his office. Safeco emphasised that the Longview house was largely unfurnished, with solely an air mattress, a tv, and minimal home equipment. Safeco famous in its movement for abstract judgment that utility utilization on the Longview property was minimal and that Adkisson spent nearly all of his time at his Godley residence resulting from work obligations.
In response, Adkisson argued that he ceaselessly returned to the Longview property, spending weekends there to go to household and work on renovations. He maintained voter registration and important mail on the Longview deal with, reflecting his intention to think about it his residence. Moreover, he asserted that area heaters had been in use on the property in the course of the freeze, demonstrating affordable care to take care of warmth.
The Court docket’s Findings
The court docket dominated in favor of Safeco, concluding that Mr. Adkisson didn’t reside on the Longview property in a fashion that met the coverage’s definition of “residence premises.” The court docket highlighted a number of key factors:
Major Residence: Whereas the policyholder might personal a number of properties, the insurance coverage coverage’s protection hinges on whether or not the insured “resides” on the insured location as their major residence. The proof urged that Mr. Adkisson primarily lived in Godley, not Longview.
Emptiness and Occupancy: The court docket discovered that the Longview property’s state of disrepair and restricted furnishings indicated it was not occupied in a significant sense. The presence of minimal belongings and restricted utility utilization additional supported this conclusion.
Affordable Care: Safeco’s denial additionally relied on the “freezing exclusion” clause, which exempts protection for freeze-related harm if the insured fails to take care of warmth or shut off the water provide. The court docket discovered inadequate proof that affordable care had been exercised to take care of warmth or shield the property from freezing situations.
Listed here are some takeaways for residential policyholders:
Make clear Residency Definitions and Standing: Insurers typically require the insured property to be the policyholder’s major residence. In case you personal a number of properties or in case you are residing outdoors of what was once your major house for any purpose, make sure you perceive how your insurer defines “residence premises” and what proof could also be required to ascertain occupancy. Let your insurance coverage agent know of the change by telephone and in writing.
Doc Property Use: Often doc your presence and actions at insured properties, particularly if they don’t seem to be your major residence. Preserve information of utility payments, repairs, and different proof demonstrating lively use and care of the property.
Talk Adjustments: Notify your insurer and insurance coverage promptly of any modifications in how you employ or occupy a property. Proactively discussing these modifications might help keep away from protection disputes. That is my primary tip as a result of there could also be extra modifications than simply residency, and the extra interplay there’s, the higher an expert insurance coverage agent might help.
Preserve and Monitor Properties: Take steps to guard properties you go to occasionally from harm. Guarantee utilities are useful, warmth is maintained in winter, and water techniques are shut off when applicable. Clarify these actions in writing to your insurance coverage agent and insurer.
The Function of Insurance coverage Brokers Relating to the Residence Premise Concern
One other important lesson from this case is the worth of normal consultations together with your insurance coverage agent. Schedule annual opinions of your insurance policies to debate modifications in your residing circumstances, property utilization, or deliberate renovations. These conversations might help make sure that your protection aligns together with your wants and keep away from misunderstandings about coverage phrases. These circumstances typically come later in life when a beloved one turns into sick, disabled and resides with others and never on the prior major residence. Caretakers, family members, and even nursing house executives ought to alert insurance coverage brokers in regards to the change of circumstances in order that the fullest protection might be maintained.
In, Do Insurance coverage Brokers Matter, I made the next remark:
Individuals don’t learn the insurance coverage insurance policies they buy. Even when they tried to take action after the acquisition, the phrases are so complicated that few would totally perceive what they purchased. The small print in most insurance coverage insurance policies exclude, restrict or besides essential protections.
In mass promoting, insurance coverage corporations by no means point out the damaging small print buried it their product, which leaves clients susceptible. As an alternative, the insurance coverage firm mantra is essentially about value comparability and, sometimes, feel-good tales in regards to the insurance coverage firm. Little is marketed about precisely what the buyer purchases, and comparisons are at all times based mostly on value, not the precise insurance coverage merchandise.
…
Historically, insurance coverage brokers, particularly impartial insurance coverage brokers, have supplied the buyer with data, expertise and recommendation in regards to the varied types of insurance coverage and the choices accessible. Gaps and lack of advantages in protection that go away clients with out significant protection within the occasion of a catastrophe are sometimes prevented by competent insurance coverage brokers, licensed and controlled by states, who truthfully clarify the insurance coverage merchandise provided and bought.
Nothing is ‘free.’ The mass advertising of essential and expensive monetary merchandise, comparable to auto insurance coverage, with out clarification to the buyer, hides the true prices of the product when it has to carry out. The insurance coverage trade invitations unfavourable impressions by failing to clarify or warn its clients in regards to the hidden prices contained in mass ads. These insurance coverage corporations are so low-cost that they deliberately minimize out the price of the insurance coverage agent, who has the function to clarify what it’s that’s being offered to the buyer and the buyer’s accessible choices.
Good insurance coverage brokers do matter. I get the sensation that the majority insurance coverage corporations that mass promote solely pay lip service to how essential they are surely.
The ‘residence premises” problem retains arising in instances. My colleague Shaun Marker wrote about it earlier this yr in The Which means Of The Phrase “Reside” Based on New York’s Highest Appellate Court docket. Mr. Adkisson’s inheritance of his father’s property in 2016 initiated nuances and complexities of insurance coverage protection most policyholders would by no means consider. One of the simplest ways to keep away from these disputes is to remain vigilant with insurance coverage agent conferences about one’s life circumstances. By maintaining your insurance coverage agent knowledgeable about your life and altering dangers, policyholders have the perfect avenue to keep away from monetary catastrophe brought on by an uncovered loss.
The Function of Household, Actual Property, Probate and Elder Legislation Attorneys
Household, probate, actual property, and elder legislation attorneys play essential roles in addressing potential insurance coverage points that always come up throughout main life occasions. Household legislation attorneys can advise on sustaining correct protection following divorce or separation. Probate attorneys can information heirs in making certain protection for inherited properties. Actual property attorneys can assessment insurance coverage obligations in property transactions, notably for secondary or trip properties. Elder legislation attorneys can counsel shoppers on updating insurance policies to mirror modifications in residing preparations typically brought on by well being or deterioration. Collaboration between these authorized professionals, shoppers and the shoppers’ insurance coverage advisors is vital to making sure complete safety throughout life’s transitions.
Thought For The Day
“Proudly owning a number of properties could be a blessing, but it surely’s essential to handle them in order that they improve your life, not burden it.”
—Tony Robbins
1 Adkisson v. Safeco Ins. Co. of Indiana, No. 6:23-cv-00146 (E.D. Tex Nov. 15, 2024).
