The importance of the phrase “where you reside” is probably well-known by those of my readers who solicit and sell personal lines policies. It should also be something that is known by every person who has a homeowner’s insurance policy, as those three little words can mean the difference between coverage and no coverage for a loss to a home. Why that is so is due to the definition of what structure is covered by a homeowner’s policy. Although not universal, most homeowner’s policies, including the ISO HO-3 form, define what is covered by them as being the dwelling on the residence premises, which in turn are defined as the place “where you reside”, with “you” being the named insured or their spouse, if any.
In several states, including Georgia, the appellate courts have held that if the named insured or their spouse did not actually live in the structure on the residence premises specified in the policy at the time of the loss, there is no coverage for the loss. This means that if you are renovating a home and not living there during the renovations or have just purchased a home but not yet moved in, a homeowner’s policy that contains the above definitions will not provide coverage for a loss that occurs during those time periods. There are many other factual scenarios that could result in the same outcome (in the first Georgia case, there was a divorce and the named insured spouse had moved out of the home leaving her now ex-spouse there), all of which are explored in a white paper created by IIABA’s Virtual University staff in 2009. This is perhaps the ultimate trap for the unwary, as far as homeowner’s policies are concerned. It became such a focus of concern that IIABA created a webpage devoted to the problems raised by the words “where you reside” in such policies and how those problems could be addressed.
After 10 years of IIABA’s working on ISO to remedy the above problems, ISO has finally agreed to issue two new endorsements for its homeowner policy forms, which will be effective in most states on October 1, 2015. One of those endorsements is mandatory and one is optional. The mandatory endorsement, for which no extra premium should be charged, changes the definition of the structure covered by the policy to one where the named insured and any spouse live “on the inception date of the policy period shown in the Declarations” for the policy. As long as the named insured or any spouse are living in the structure on that date, any loss for which the policy provides coverage will not be denied if the named insured or any spouse are not living in the structure for any reason when the loss occurs.
While this change takes care of many of the coverage problems noted in the IIABA white paper, Including the situation addressed by the first Georgia case, it does not address what happens if the buyer of a home does not move into it by the inception date of the policy. In that situation, the policy may not provide coverage even after the buyer moves in, since they were not living in the home on the inception date of their policy. The optional endorsement that has been issued by ISO is meant to take care of this and similar situations. For what will most likely be an extra premium, the “where you reside” language is removed from the definition of the covered structure for a stated period of time, which can be the entire policy period. (For an in-depth article on the new ISO endorsements and their background, click here.)
The IIABA will be holding a free webinar on July 8, 2015 from 3-4 p.m. EDT to explain the new ISO endorsements. Unfortunately, its 1,000 capacity limit has been reached already. However, the webinar will be recorded and a link to it will be available on the IIABA’s recorded webinars page shortly after July 8.