My May 2026 column about the enforceability of an exclusionary endorsement that was not listed in a policy’s schedule of endorsements began with this quotation that referenced “endorsements hiding in plain sight”:
“Insurance rarely fails loudly. It fails quietly, through definitions, territorial carve-outs, and endorsements hiding in plain sight.” — Yehuda Daniel Katz
I begin this month’s column with the same quote because it references policy “definitions…hiding in plain sight.” This is a great quotation because it illustrates that many losses can be denied not by exclusions per se but by other policy provisions that may unexpectedly, under certain circumstances, result in a lack of coverage.
Coverage under insurance policies usually begins with an Insuring Agreement that establishes a broad basis for coverage. Then, to make the risk insurable and coverage affordable, the insuring agreement is whittled down by limitations in the policy, from deductibles to special limits and conditions to exclusions. All too often we focus only on exclusions when advising customers.
In my September 2022 column, I wrote about an issue that I thought was mostly a historical perspective of how coverage can be lost not by application of an exclusion but rather by an insuring agreement itself. As I explain in the aforementioned column, this issue first came to my attention 22 years ago, and it took me 10 years to get ISO to address the issue and one insurance company to resolve the issue.
The vast majority of homeowners policies cover the dwelling on the “residence premises” shown on the policy’s declarations page. The term “residence premises” is defined in most policies to include the dwelling “where you reside.”
One interpretation of this language is, if you don’t reside in the dwelling at the time of the loss, you have no coverage for damage to that dwelling. As my 2022 column outlined, in a white paper I wrote that triggered my 10-year quest to resolve this issue, I gave numerous real-life examples of claims denied where insureds lost their homes or suffered six-figure uninsured losses. These denied claims weren’t the result of the application of an exclusion but rather arose from three words buried in a definition referenced in an insuring agreement.
Space doesn’t allow for a rehash of all of those examples, but I’ll provide a few recent ones that prompted this month’s column. In addition, next month I’ll be doing a webinar for the Academy of Insurance where I will discuss the issues and solutions involved in this potentially catastrophic coverage gap in greater detail.
In his Insurance Coverage Law blog, policyholder attorney Chip Merlin discusses a fire loss to a Minnesota dwelling owned by an insured who had moved to Georgia at least two years earlier, though his sons continued to reside in the Minnesota home.
In Pour v. Liberty Mutual Personal Ins. Co., No. 24-1824, 2025 WL 3440993 (8th Cor. Dec. 1, 2025), the plaintiff had argued that “where you reside” was a descriptive term applicable at the time of policy inception and not a warranty of continued residency. However, the court ruled that the father did not live in the dwelling at the time of the policy renewal nor at the time of loss, so there was no coverage.
In another case also reported in Merlin’s blog several months earlier, he discusses the Massachusetts case of Pimentel v. AmGUARD Ins. Co., No. 23-11005 (D. Mass. Oct. 23, 2024) where the homeowner purchased a home and insured it but could not move in immediately because apparently it needed renovation. However, before she could move in, less than a month later the dwelling suffered a $300,000 fire loss.
The insurer denied the claim, citing the residency requirement. The court noted that, according to the insurer’s interpretation, “a new policyholder must move into her new home before midnight on the ‘inception date,’ or else coverage never attaches.” The court found this interpretation to be “absurd” and, even at a minimum, the policy’s definition of “reside” was ambiguous and should be interpreted in favor of the policyholder.
In between these two court cases, I had a question from an agent whose insured, the only member of the household, had passed away during the policy period. There had not been a claim, but when the agent advised the insurer of this, he was told that since the named insured no longer resided there, coverage on the dwelling died when he did.
The argument for coverage continuing is that the policy includes a “Death” condition that states that coverage extends to the legal representative of the insured who presumably has an insurable interest. The counter argument is that this provision still does not specifically modify the insuring agreement that requires residency at the time of loss on the part of a named insured or resident spouse–something that is arguably nonsensical.
Regardless, the entire issue of residency has nuances that can result in a claim denial by some insurers that have been upheld in some courts. These scenarios can routinely arise when, for example, an insured is unexpectedly confined to a nursing home, then learns that he or she will never be able to return to their residence. Does coverage end at that instance?
Insureds sometimes relocate on short notice due to job changes. Homes are foreclosed on. People move out of their homes days before closing the sale with the new owners. A home may be purchased but not occupied for days, weeks, or months due to renovations or remodeling. An insured leaves home for months on military deployment. And the list goes on.
Are your customers aware that they need to report changes in residency that take place after policy inception? When was the last time you advised them of the importance of such notice?
Again, this issue will be addressed next month in much greater detail in the webinar I’m doing for the Academy of Insurance. If you have specific questions you’d like me to address in that session, please feel free to email them to me. To register for the webinar, visit: www.ijacademy.com.
Wilson, CPCU, ARM, AIM, AAM, is the founder and CEO of InsuranceCommentary.com and the author of six books, including “When Words Collide…Resolving Insurance Coverage and Claims Disputes,” which BookAuthority has ranked as the #1 insurance book of all time. He can be reached at Bill@InsuranceCommentary.com.
