Hill et al. v. Nationwide Mutual Fire Insurance Company
Court of Appeals of Georgia, No. A94A0934, decided September 13, 1994; reconsideration denied October 4, 1994 (Beasley, Presiding Judge, for the court; Andrews and Johnson, JJ., concurring). The complete opinion appears below. Our text comes from the Caselaw Access Project (case.law), Harvard Law School’s open archive of published U.S. case law, which supplies the opinion as printed in the official reporter at 214 Ga. App. 715. The reporter’s head matter is only the docket number, the caption, and the parallel-cite line “(448 SE2d 747)”; the caption and a court-and-date line are reprinted above the opinion, and the parallel-cite line is dropped. The archive’s text also sets the reporter’s page-foot block down in the middle of the opinion, between two paragraphs — the “Decided September 13, 1994 / Reconsideration denied October 4, 1994” lines and the counsel listing (Dorough & Sizemore, Kermit S. Dorough, Jr., and W. James Sizemore, for appellants; Murray & Temple, William D. Strickland, and John C. McCaffery, for appellee). That block has been lifted out of the opinion and summarized in this paragraph instead. Here is the complete list of repairs to the remaining text: the judge’s name line was set in bold; “Atlantic Wood Indus, v.” was corrected to “Atlantic Wood Indus. v.”, where the scan read a period as a comma; the counsel name broken across lines as “W. James Size-more” was rejoined to “Sizemore” (in the summary above); and the court’s single unnumbered footnote, which the archive prints as a bare final line with no reference mark, is labeled below as the footnote it is. Nothing else was touched. No word of the court’s has been changed, condensed, reordered, or paraphrased.
The full opinion
HILL et al. v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY.
Court of Appeals of Georgia. No. A94A0934. Decided September 13, 1994. Reconsideration denied October 4, 1994.
Beasley, Presiding Judge.
The Hills took out a homeowners insurance policy with Nationwide in 1988. In June 1992, the Hills moved from the covered home, which suffered damage in an August 1992 fire. Nationwide refused to pay the Hills’ claim and the Hills sued. Nationwide moved for summary judgment, relying upon the insurance agreement’s language identifying the covered premises. The Hills moved for partial summary judgment as to liability, relying upon the same language. Summary judgment was awarded to Nationwide and the Hills appeal.
The Hills contend that the trial court erred as a matter of law in reading the contract to exclude coverage after the Hills moved from the premises. They argue that it must be read to include coverage, or in the alternative, to be ambiguous and therefore construed against its drafter, Nationwide. On the other hand, Nationwide relies only upon the contract language identifying and defining the covered premises. It argues that in identifying the premises, the agreement also requires that the premises be occupied or become, in effect, “unidentified.”
The policy states: “We cover: a. the dwelling on the residence premises shown on the Declarations and mainly used as a private residence, including attached structures and attached wall-to-wall carpeting.” This coverage clause contains no exclusion of coverage when the dwelling is vacant, nor does any such explicit exclusion appear elsewhere in the agreement. Nationwide does not contend that the dwelling was not “mainly used as a private residence,” even though temporarily vacant. Rather, it points to the definition section of the agreement and its clause: “8. ‘Residence premises’ means the one- or two-family dwelling, other structures and grounds; or that part of any other building where you live, shown as the residence premises on the Declarations.” The declaration page shows the location of the residence premises as Lot 60F, Pecan Subdivision, Putney, Georgia. It is undisputed that the damaged home is located there. Nationwide contends that this definition is tantamount to a clause that states coverage will cease when the premises are no longer used as the residence of the insured.
“ ‘ “In construing an insurance policy, ‘(t)he test is not what the insurer intended its words to mean, but what a reasonable person in the position of the insured would understand them to mean. The policy should be read as a layman would read it and not as it might be analyzed by an insurance expert or an attorney.’ (Cit.) ‘Where a provision in a policy is susceptible to two or more constructions, the courts will adopt that construction which is most favorable to the insured. (Cit.)’ (Cits.)” (Cit.)’ [Cit.]” Atlantic Wood Indus. v. Lumbermen’s Underwriting Alliance, 196 Ga. App. 503, 505 (2) (396 SE2d 541) (1990). “ ‘Under Georgia law, the risk of any lack of clarity or ambiguity in an insurance contract must be borne by the insurer. (Cit.)’ [Cit.]” Id. at 506. “ ‘Ambiguity in an insurance policy may be defined “ ‘as duplicity, indistinctness, an uncertainty of meaning or expression.’ ” [Cit.]’ [Cit.]” Cantrell v. Nationwide Mut. Fire Ins. Co., 193 Ga. App. 106, 107 (387 SE2d 42) (1989). Additionally, “ ‘ “ ‘[t]he contract must be examined “as a whole” in attempting to construe any portion thereof.’ ” ’ ” Edwards v. Atlantic Ins. Co., 203 Ga. App. 608, 609 (1) (417 SE2d 410) (1992).
Nationwide contends that the “clear import” of the policy’s definition of residence premises is that the identified premises are insured only so long as the insured lives at that location. That, however, is not the case. Language such as that used here does not impose requirements but rather “may be viewed as relating only to identification of the [covered premises].” Cantrell, supra at 107. A conclusion that this language is only for identification is supported by the structure of the contract and its different clauses. The definition clause is referred to by the identification clause, which simply identifies the premises covered. Neither states a requirement that the insured reside on the premises for it to be covered.
The only requirement of residence that could be read into the definition clause would pertain only to “that part of any other building where you live… .” The inclusion of the language “that part of any other building where you live” is obviously inserted to provide coverage of only the appropriate space when the insured resides in a multi-unit dwelling and not in a “one- or two-family dwelling” of the type listed previously in the definition. This identification of covered premises then makes reference to the declarations page for more specific identification of the “one- or two-family dwelling” or “part of any other building” that is the covered premises.
To give the identification clause the reading urged by Nationwide also would render other portions of the agreement ineffectual. In Section I of the agreement, dealing with property damage and exclusions of coverage, the contract states that one of the perils insured against is physical damage due to freezing pipes “while the dwelling is vacant, unoccupied or being constructed” as long as the insured has used reasonable care to maintain heat, shut off the water, and drain the water systems. Similarly, coverage is explicitly provided for damage due to vandalism during the first 30 days of vacancy. This section of the contract states that items not excluded are covered.
These provisions, explicitly granting coverage through the mechanism of exceptions to exclusions, are the only references to vacancy in the contract. Coverage is also extended to damages to personal property during similar periods of vacancy or unoccupancy.
Thus, Nationwide advocates a construction of the contract that either renders specific coverages void or allows coverage during vacancy for the perils of vandalism and freezing pipes not specifically excluded, but somehow voids coverage for the fire that occurred in the instant case. Neither construction comports with the requirement that the contract be read as a whole, Edwards, supra, nor with the rule of contract construction that specific terms will prevail over general. Auto-Owners Ins. Co. v. Barnes, 188 Ga. App. 439, 440-441 (1) (373 SE2d 217) (1988); Southeast Atlantic Cargo Operators v. First State Ins. Co., 197 Ga. App. 371, 373 (398 SE2d 264) (1990).
Nationwide urges as controlling the case of Epps v. Nicholson, 187 Ga. App. 246 (370 SE2d 13) (1988), in which a slightly different identification clause was found to exclude coverage when the insured did not occupy the residence premises. In Epps, however, the identification clause defined “residence premises” as “ ‘the one or two family dwelling, other structures, and grounds or that part of any other building where you reside and which is shown as the “residence premises” in the Declarations.’ ” Id. at 246. This clause was found to impose two requirements for coverage, that the dwelling be where the insured resides and that it be identified on the declaration page. The premises at the listed address was rental property.
Moreover, contrary to Nationwide’s contention, the insurance agreement at issue does not “define [ ] residence premises in terms identical to the contract language in Epps.” The clause at issue defines “residence premises” as “the one- or two-family dwelling, other structures and grounds; or that part of any other building where you live, shown as the residence premises on the Declarations.” Although wording is similar, it is different in crucial respects, as is punctuation. One major difference in the wording of the Epps and instant clauses is the inclusion of the word “and” between “where you reside” and “which is shown … [on the declaration page]” in the Epps clause. This language makes it clear that in the Epps policy, both situations are required. The conjunctive “and” does not, however, appear in the instant clause. To the contrary, the instant clause includes a disjunctive “or,” which is not present in the Epps clause at all. Additionally, the inclusion of the semi-colon in the instant clause clearly shows that “where you live,” without any intervening punctuation, is only intended to modify “that part of any other building.” Punctuation is an important indicator of meaning. See, e.g., Ga. Intl. Life Ins. Co. v. Bear’s Den, 162 Ga. App. 833 (1) (292 SE2d 502) (1982).
Nationwide also relies upon Ga. Farm Bureau Mut. Ins. Co. v. Kephart, 211 Ga. App. 423 (439 SE2d 682) (1993), but this reliance is misplaced. The identification clause in that case defined “residence premises” as “ ‘a. the one family dwelling, other structures, and grounds; or b. that part of any other building; where you reside and which is shown as the “residence premises” in the Declarations.’ ” Id. at 424 (1) (a). This language and sentence structure clearly require that whether the covered premises is “a. the one family dwelling …” or “b. that part of any other building,” the insured must reside there. Kephart had permanently moved from the premises and her ex-husband and new wife were living there while Kephart was the named insured. Nationwide did not write the contract in this case in the same way as was done in Kephart and the fact that there was a residence requirement in Kephart does not affect the plain meaning of the language in the instant case. Additionally, the Kephart policy also contained a clause stating “ ‘the residence premises (must be) the only premises where the named insured or spouse maintains a residence… .’ ” Id. Again, Nationwide did not include such a clause.
Reading the insurance contract as would a reasonable person in the position of the insured, it clearly provides coverage of the house on the lot listed on the declaration page. The court erred in granting Nationwide’s motion for summary judgment and in denying the Hills’ motion for partial summary judgment.
Judgment reversed.
Andrews and Johnson, JJ., concur.
Footnote (the court’s single footnote; the archive’s text carries no reference mark for it, so it is set out here at the end, where the archive prints it).
The policy does not require that the insured have an ownership interest in the covered premises.
What it decided
The Hills bought a Nationwide homeowners policy in 1988. They moved out of the covered house in June 1992. It burned in August 1992. Nationwide refused to pay, and it did not argue arson, or misrepresentation, or that the family had bought a different policy. Its whole defense was the sentence in the definitions section that says what “residence premises” means. Read Nationwide’s way, that definition quietly converted itself into an occupancy condition: live somewhere else and the house stops being insured.
The trial court agreed with the carrier. The Court of Appeals reversed, and it did four separate things on the way there.
It looked for the vacancy exclusion, and there was none. “This coverage clause contains no exclusion of coverage when the dwelling is vacant, nor does any such explicit exclusion appear elsewhere in the agreement.” Nationwide never even argued the house had stopped being “mainly used as a private residence” — the court noted that concession, “even though temporarily vacant.”
It held that identifying language identifies; it does not condition. “Language such as that used here does not impose requirements but rather ‘may be viewed as relating only to identification of the [covered premises].’ ” The definition clause is what the identification clause points to, and “[n]either states a requirement that the insured reside on the premises for it to be covered.”
It read the contract as a whole, and the carrier’s reading broke it. The policy expressly covered frozen pipes “while the dwelling is vacant, unoccupied or being constructed,” and expressly covered vandalism during the first 30 days of vacancy. Those, the court said, “are the only references to vacancy in the contract.” So Nationwide’s construction “either renders specific coverages void or allows coverage during vacancy for the perils of vandalism and freezing pipes not specifically excluded, but somehow voids coverage for the fire that occurred in the instant case.”
It decided the case on the words, down to the punctuation. Nationwide leaned on two earlier Georgia decisions, Epps and Kephart, where near-identical-sounding definitions did impose an occupancy requirement. The court took the three policies apart side by side. Epps used the conjunctive “and”; this policy used a disjunctive “or.” This policy had a semicolon that confined “where you live” to “that part of any other building.” Kephart also carried a separate clause requiring that the residence premises be “the only premises where the named insured or spouse maintains a residence” — and “Nationwide did not include such a clause.” As the court put it, “Punctuation is an important indicator of meaning.”
Judgment reversed. And not merely reversed: the court held the trial judge also erred “in denying the Hills’ motion for partial summary judgment,” meaning liability was established, not just re-opened. A footnote adds that the policy “does not require that the insured have an ownership interest in the covered premises.”
What it did NOT decide
- It did not hold that vacancy never matters in Georgia. Epps and Kephart survive this opinion; the court distinguished them, it did not overrule them. Where the definition ties the covered premises to a place “where you reside” with a conjunctive “and,” a Georgia insured can lose. This case turned on an “or” and a semicolon.
- It did not construe an actual vacancy exclusion, or a vacancy clause of the kind found in some fire policies. Nationwide had none in this contract, so the court never reached the question of how such a clause would be applied. If your policy contains a written vacancy or unoccupancy provision — including one that suspends specific perils after a stated number of days — Hill does not answer it. Read the clause.
- It did not decide whether the house was “mainly used as a private residence.” That requirement is in the insuring clause, and it was live on the page — but Nationwide expressly did not contend the house failed it, so the court had no occasion to interpret it.
- It did not decide how much Nationwide owed. The appeal fixed liability. The extent of the fire damage, the valuation of it, and every other term of the policy were left where they were.
- It did not create an ambiguity rule the Hills needed. The Hills argued in the alternative that the language was ambiguous and should be construed against the drafter. The court did not have to go there; it found the contract “clearly provides coverage.” That distinction matters — the holding is that the policy plainly covers, not merely that a tie goes to the insured.
- It is a 1994 policy form. It tells you how a Georgia court reads that Nationwide wording. It does not tell you what your policy says. Nothing in this opinion substitutes for pulling your own declarations page and your own definitions section.
Why it matters to policyholders
The denial you are most likely to get is the one Nationwide made here: an exclusion that was never written down. A house sits empty for a renovation, a divorce, a job transfer, a death in the family, a sale that has not closed. It burns, or a pipe bursts, or someone breaks in. The letter comes back saying the loss is not covered because you did not live there. Hill is the Georgia answer to that letter when the policy contains no vacancy exclusion: the definition of “residence premises” identifies the house, and identification is not a condition.
Georgia already requires the carrier to show you the clause. Under the state’s claim-handling rule, a denial must reference the specific policy provision, condition, or exclusion it rests on — see Ga. Comp. R. & Regs. 120-2-52-.03. That is the first thing to ask for in writing, because Hill is a case about whether the clause the carrier is pointing to actually says what the carrier says it says. If the denial letter cannot name a vacancy exclusion, there may not be one.
The rest of Georgia’s construction law runs the same direction. Exclusions get read narrowly against the insurer that wrote them — see Nationwide v. Kim. Genuinely ambiguous exclusionary wording is construed in the insured’s favor — see American Strategic v. Helm. Hill sits one step earlier than both: before you argue an exclusion is narrow or ambiguous, ask whether the carrier has identified an exclusion at all.
Vacancy also shows up as a second-order argument, and that is worth watching for. In Evans v. Ohio Casualty, one of the carriers told the insured it was “not certain if such loss was covered as the property was vacant,” and pleaded vacancy as a defense — and the Court of Appeals held that raising that defense “did not relieve him of his obligation to comply with the requirements of the contract.” Read together, the two cases give a hard practical rule: a vacancy argument may be beatable on the coverage merits, and it still does not excuse you from doing every post-loss thing your policy requires. Keep performing while you fight.
What the work looks like. Get the denial in writing and make it name the provision. Get the complete policy, not the summary — the declarations page, the definitions section, and Section I in full. Compare the actual sentence to the sentence the carrier is describing, word for word and mark for mark; Hill was won on a semicolon. Document why the house was empty and for how long, because temporary vacancy and abandonment are not the same thing and the file should say which one this was. Then document the damage and price the repair.
That much is adjusting work, and it is what we do: document the loss, price it, put the coverage position in writing, and negotiate it. If the carrier holds a denial that the policy language will not support, the next lever is a lawsuit — and a bad-faith claim under O.C.G.A. § 33-4-6 is attorney work. A public adjuster builds the record and refers the litigation out. More Georgia claim law, in full text, is on the Georgia claim-law page.
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