Homeowner (HO) insurance coverage, which protects against damage to household property and provides liability protection, is quite standardized. In other words, different insurance companies offer HO coverage in, essentially, the same manner.

A key issue for coverage is that the policyholder must live at the residence premises. Such premises are commonly defined in policies. Wording used in many HO forms define the residence premises as the dwelling “where you reside.” These three words create substantial consequences.

There are several instances where a named insured’s living arrangement may result in a loss of HO protection. Consider the following:

• A home with a person residing there as the result of a trust agreement
• A home’s owners are permanently residing at an assisted living facility and their children live in the home.
• A home is sold; the owners move to their new home, but permit the buyers to live in the previous resident until the closing.

In such situations, the named insured does not live at the location described in the policy. While some insurance companies treat these instances as a matter of whether the homes are still desirable to cover, other companies have denied claims. The basis for denial is that, at the time of loss, the named insured was not a dwelling resident.

It is important that agents be aware of changes in living circumstances and that policyholders report these changes promptly. Coverage gaps may be handled in various ways such as the use of a trust endorsement, voluntary acceptance of the living arrangement by an insurer to maintain coverage or replacing an HO with a dwelling fire policy.

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