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March 26, 2021

NYS Appellate Court Allows Water Damage Claim to Proceed Despite Insured Premises Being Unoccupied at the Time of Loss

Property insurance policies generally contain provisions excluding coverage for water damage if the property is vacant and if the loss is caused by freezing and the insured failed to maintain heat at the property. In Laura E. Place v. Preferred Mutual Insurance Company, et. al., the New York State Appellate Division, Third Department, found that a homeowner’s insurer could not obtain a summary judgment dismissal of a claim for water damage at an unoccupied property because it was questionable whether the property was vacant, as defined in the policy, and whether the insured used reasonable care to maintain heat.

In Place, the insurance policy covered the insured’s primary residence in Essex County that was purchased in 2010. In August 2016, the insured purchased and moved into a new primary residence, but periodically visited her Essex County property, which was otherwise unoccupied. In February 2017, upon a visit to the property, the insured discovered significant water damage that was apparently caused by freezing and cracking of the residence’s plumbing unit.

The insurer denied the property damage claim on the ground that the insured no longer resided at the property, as the policy required. The insurer also denied coverage under a policy exclusion for a loss caused by freezing to a plumbing unit or similar system “if the ‘residence’ [was] vacant” and the insured failed to exercise “reasonable care” to maintain heat at the property.

The insured filed a lawsuit to obtain coverage for the loss, and both parties filed motions for summary judgment, which were denied by the trial court. On appeal, the Appellate Division affirmed the denial of both motions. The court first held that the policy was ambiguous as to whether the property qualified as an “insured premises” even though the insured was not living there since other provisions in the policy appeared to provide coverage even if the property was vacant. This aspect of the decision is significant because this issue often arises as to whether a property qualifies an “insured premises” where the insured is no longer residing at the premises. Nevertheless, the court denied the insured’s motion for summary judgment because there was an issue of fact as to whether the above referenced exclusion applied. The court found that, although the insured presented evidence that she maintained the thermostat at 55 degrees Fahrenheit and that her mother periodically visited the property and kept it warm, the insurer refuted that evidence by presenting a report that challenged whether the insured used reasonable care to ensure the property was heated, including adequately checking on the property which could have led to the discovery of a broken window in the house. Essentially, the court’s decision denied either party the right to an early win and compels them to litigate these factual questions in a trial.

The Place decision is a reminder to policyholders to be sure heat is maintained at their properties, especially during the cold months, to avoid any water damage caused by freezing pipes and for purposes of insurance coverage. The decision also is instructive for insurance companies to conduct a thorough investigation and, if they disclaim coverage, to be prepared for a potential litigation through trial.

If you have any questions regarding the content of this alert, please contact Sanjeev Devabhakthuni, counsel, at; Matthew Paris, associate, at; or another member of the firm’s Insurance Coverage & Regulation Practice Area.


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