Most subrogation professionals have encountered a strong subrogation claim against a negligent third party who does not have his or her own liability coverage, but whose relative – most likely a parent –has a homeowner’s policy which may cover the individual’s liability. The key factor in determining whether the homeowner’s liability policy will apply is whether the negligent individual is considered a resident of the insured’s household. Certainly the most obvious example is someone’s son at college who accidentally starts a fire at a dorm room. Will the parent’s homeowners policy kick in and cover the son’s liability for the property damage to the dorm?
The key question to consider is whether the individual is considered a “resident” of the home. Unfortunately, most homeowners policies do not define “resident,” so it is often left to the state to figure out whether someone is considered a “resident.”
In an August 15, 2013 opinion, the Michigan Court of Appeals has helped clarify and simplify the factors to consider in determining whether a person qualifies as a resident. In Freemont Ins. Co. v. Martin, No. 310906, the Court, after examining past case law and the issue at hand, identified eight factors to help determine whether an individual is a “resident.” These factors are to be weighed with the others, and no one factor is conclusive and determinative. The factors to be considered are:
- the subjective or declared intent of the individual to remain in the place he or she contends is his “domicile” or “household”, either permanently or for an indefinite/undetermined amount of time;
- the formality or informality of the relationship between the individual and the members of the household;
- whether the place the individual lives is in the same house, within the same curtilage or upon the same premises;
- the existence of another place of lodging by the individual alleging residence or domicile;
- the individual’s mailing address;
- whether the individual maintains possessions at the insured’s home;
- whether the insured’s address appears on the individual’s driver’s license and/or other documents;
- whether a bedroom is maintained for the individual at the insured’s home; and
- whether the individual is dependent on the insured for financial support or assistance.
The Court also made clear that in cases where the facts are undisputed, whether an individual qualifies as a resident will always be a legal question for the court. In the case of Freemont Ins. Co., the court determined that the individual was not considered a resident at the time of the incident. The individual had since moved back in with his parents, but at the time of the indent, he lived in an apartment with his girlfriend, and the court examined the factors listed above and concluded that he was not a resident at the time of the incident, therefore concluding that the parents’ homeowners policy did not cover their son’s liability for the incident. A copy of the five-page opinion is available here. Although the facts of the Freemont Ins. Co. case did not support a finding of residency, the case is still a reminder that if you have a loss involving a tortfeasor who does not have liability insurance, be certain to evaluate whether he/she is a resident of a home where there could be liability coverage under a homeowner’s policy.