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The carrier denied the homeowner’s claim because she allegedly did not reside at the property where the loss was suffered.  The insured actually owned two homes, and stated she resided in both. The carrier took the position that there could only be one residence for insurance coverage purposes, and after the insured moved from the first home into a second home, the first home was not insured because the insured did not reside in the first home.

The insured testified that she told the carrier she was purchasing a second home, and that she intended to live in both at different times during the year, without the carrier raising any residency or coverage questions when issuing a policy on the first home.

Before the fire loss at issue on the first property, the insured made earlier claims for smaller losses at the first property, which the insurer paid.  When she suffered a large fire loss at the first property at a later date, however, the insurer raised the residence issue for the first time as a basis to deny coverage.  The fire loss originally went to an adjustor who indicated there was coverage; however, the carrier transferred the claim to its large loss department, which relied upon the residency requirement to deny coverage.

The insured sued for breach of contract and bad faith, and the carrier moved for summary judgment. The court denied the summary judgment motion on both claims.

The court found that there were material disputes of fact on both the insurance policy language and the insured’s reasonable expectation, and thus denied summary judgment on the breach of contract claim.

As to bad faith, the court found facts supporting the insured’s claim, which had to be taken as true for summary judgment purposes.  These included:

  1. Paying on the earlier, smaller, claims without raising residency, and without incident;
  2. The adjustor on the fire loss initially found the claim covered, but after transfer to the large loss unit, the residency issue was raised for the first time, and coverage was denied;
  3. There was evidence the insured told the carrier years before the fire loss that she was buying a second home and would be spending time in both homes, without any response from the carrier that the insurance on the first home would somehow be voided on ineffective because of the residency issue; and
  4. For summary judgment purposes, the court could infer that the fire claim was denied only because it reached large loss status, unlike the earlier claims which were smaller and indemnified.

Western District Court Judge Stillman adopted this reasoning from Magistrate Judge Dodge’s Report and Recommendation in denying summary judgment.

Dates of Decision:  September 27, 2021 (Report and Recommendation), October 27, 2021 (Order adopting Report and Recommendation)

Cerci v. Hartford Financial Services Group, Inc., U.S. District Court Western District of Pennsylvania No. CV 19-1588, 2021 WL 4987585 (W.D. Pa. Sept. 27, 2021) (Dodge, M.J.), report and recommendation adopted, No. 2:19-CV-1588, 2021 WL 4992825 (W.D. Pa. Oct. 27, 2021) (Stickman, J.)