Policies of insurance typically contain a section describing what the insurance covers as well as certain definitions. In most common policy forms, there is a section similar to the below:
COVERAGE A-Dwelling
We cover:
1. The alterations, appliances, fixtures and improvements which are part of the building contained within the “residence premises”;
2. Items of real property which pertain exclusively to the “residence premises”;
In Arguelles v. Citizens[1], the Insured, Arguelles, sued Citizens after suffering a loss at his property in 2016. Arguelles had originally purchased the insurance policy from Citizens in 2013 and the policy renewed automatically every year. However, in late 2013, Arguelles moved from the property to another state and subsequently rented the property to tenants.
Citizens denied the 2016 loss as being a long term leak. During the litigation, Citizens moved for summary judgment contending that the policy required Arguelles to live in the property in order for coverage to exist. Citizens motion was granted and an appeal ensued.
The appellate court held that the policy was clear and unambiguous as it extended coverage to the “residence premises” which was defined in the policy as the “unit where you reside.” The Court stated that the uncontroverted facts showed Arguelles did not “reside” at the property. The appellate court also determined that the failure to define “reside” did not make the policy ambiguous, the term should have been given its ordinary meaning.
As we always caution, insurance coverage should be reviewed every year to ensure that coverage is appropriate for the circumstances. Otherwise, simple words contained in a policy may result in a lack of coverage.
Alvarez Law Group
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