If you are going to rent out your home, AND NOT LIVE THERE, make sure you talk to your agent about proper coverage. Whatever you do, don’t lie about where you live and engage in a “cover-up” after a loss happens.
Landlords can get insurance to cover their properties. The problem is they are often more expensive than homeowners policies because tenants are statistically not as likely to observe and correct conditions that may lead to a loss. So some landlords try to save a buck by claiming they live there. When they have a loss, however, they learn that homeowners policies specifically state that there is no coverage for the dwelling if the insured does not reside in it.
In this case, a fire occurred in 2010 to a house that was rented out by its owner. After the fire occurred, knowing he needed to be a “resident” in order to have coverage, he claimed he “lived” there just because he owned the house. This was the address on his driver’s license, and he did frequently stop by to check the mail and pick up his tools from the locked garage. The problem was he didn’t live there at all.
With regard to residency, the court held:
Reside to me is where you live and stay and that means overnight and [does] not mean dropping in occasionally, storing your tools in the garage, even using it sometimes for your mail.
He only slept there 6-7 times in the two years before the fire. He did not have his own bedroom at the house. What few possessions he kept there were tucked away on an upper shelf in the hallway closet.
He then claimed it was the agent’s fault for giving him the wrong coverage. While we dispute that the agent was made aware that this was a rental, the court held that under the law an agent has no duty to disclose the adequacy of insurance, unless a “special relationship” exists between the agent and the insured. And in this case no special relationship existed.
Because the Trial Court found that he did not reside at the premises, and this was required for coverage, it dismissed the case.
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