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The insured purchased watercraft insurance on a boat.  During the application process, the insured represented his boat was solely used for pleasure purposes, and was did not have a residential use.  The policy included an exclusion for property damages while using a watercraft for a primary or permanent residence.

There was a fire, and the insurer denied coverage based on the residence exclusion, and sought to void the policy for fraud in the application.  The insured counterclaimed for breach of contract and breach of the implied covenant of good faith and fair dealing.

The court granted the insurer summary judgment, after finding that the insured used the boat as his primary residence, based on the facts and the meaning of primary residence as used in the policy; and misrepresented that use in applying for and obtaining the policy at issue.

New Jersey District Judge Martin then held:

  1. “The Court finds the facts, viewed holistically and considering the totality of the circumstances, sufficiently establish that [the insured] was using the Vessel as his primary residence at the time of the fire. It was the main, principal place at which he physically lived; the place he returned to when he says he is going home. He owned and sometimes stayed at [a house he owned], but his physical contacts with this residence are those of a weekend visitor at a second home, [the insurer] therefore appropriately denied coverage of [the] insurance claim under the Policy’s primary residence exclusion.”
  2. The insurer “was likewise within its right to void the Policy under the ‘Fraud or Misrepresentation provision’ in ‘Part VIII—General Provisions.’ It is plain from [the insured’s] testimony and his emails to procure a Marina slip that he intended to use the Vessel as a liveaboard and not exclusively for pleasure or recreation as he selected on the Insurance Application. To that end, [the insured] incorrectly stated or represented a material fact about the risk being insured.”
  3. “In turn, [the insured’s] counterclaims seeking a declaration that [the insurer] wrongfully denied coverage and rescinded the Policy, as well as seeking damages for breach of contract and breach of the implied covenant of good faith and fair dealing, are moot.”

Date of Decision:  January 25, 2022

Progressive Garden State Ins. Co. v. Metius, U.S. District Court District of New Jersey No. CV 18-2893 (WJM), 2022 WL 214546 (D.N.J. Jan. 25, 2022) (Martin, J.)