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June 5, 2013

A recent case involving a Patrick Leo O’Shea, a farmer from Beara, Co. Cork against FBD Insurance Company featured in two May editions of the “Irish Examiner”.

The “Irish Examiner” outlined how it was heard in the High Court that Mr. O’Shea’s mother had been living in the farm house up to the year before the fire in June 2008 but she fell and had to move in with his brother. The Policy with FBD had a standard clause indicating that cover would be “suspended” if the property was unoccupied for ninety non-consecutive days or more. The Loss Adjuster instructed by FBD reported on seeing an out of date calendar and evidence of rodents which suggested the property had been unoccupied for some time. However Mr. O’Shea indicated he had been staying at the property to tend to cattle and sought special damages of more than €230,000 and €27,000 for contents. Both parties settled the case and the terms of the settlement were not disclosed.

Most Household Policies have an “Unoccupancy” clause whereby if the property is left unoccupied for 30 to 60 days, cover will not apply for certain contingencies.

However as reported by the U.K. Ombudsman’s Office it is often unclear what constitutes “unoccupied”. Policies do not define the term so that it is potentially unclear and ambiguous (contra proferentum). Cases involving the Occupiers Liability Act have held that a person can occupy a premises without physically being in them. For example a person who has a legal title to a property may be regarded as the “Occupier”.

The U.K. Ombudsman has dealt with a number of cases and is of the view that as long as the property was visited on a reasonably frequent basis then it was “occupied” even though the Policyholder was not sleeping there every night. They also indicate they do not consider it good practice for Insurers to decline a claim for breach of the condition where breach has been a “technical” one that has not prejudiced the Insurer’s position in any way. They outline a number of examples, one involving a Policyholder who purchased a house and was renovating it to let it out. The Policyholder visited the property almost every weekend to work on it. Sometimes staying overnight. One weekend he arrived to find that the house was damaged by fire. When he submitted a claim Insurers “voided” the Policy on the grounds that the Policyholder had not made it clear that he did not intend to live in the property long term. Insurers accepted there had been no misrepresentation and the Policy was reinstated but still rejected the claim due to the “Unoccupancy” clause. However the Ombudsman was of the view that ample evidence was provided to show that the Policyholder had visited the property frequently and to check on it etc. The house was neither “abandoned nor neglected”. Because the Ombudsman considered the Policy exclusion to be unclear and ambiguous they held in favour of the Policyholder and concluded the property had not been left “unoccupied”.

In a second case involving a Policyholder living in London but who owned a house in Belfast involving a claim for malicious damage. Again the claim was rejected because the property was “left unoccupied”. The Policyholder had indicated he had visited Belfast periodically to check on the house but the Ombudsman concluded that he had simply been staying with his girlfriend in Belfast and was doubtful whether he checked on the property at all. The house was in such a poor state of repair it stretched credibility that anyone could live there even for one night and the Ombudsman considered that the Insurer’s position had been prejudiced and whilst the exclusion clause could have been written more clearly they thought on the circumstances of the case it reasonable for Insurers to apply the clause and reject the claim.

There was a third case involving an elderly woman who was unexpectedly admitted to hospital and spent more than a year away from her home. She made no arrangements for anyone to visit or check the property. She subsequently discovered the property had been damaged when pipes had frozen and burst. The Policy contained the usual “Unoccupancy” clause stipulating that the property could not be unlived in for more than 30 days. It was held by the Ombudsman that the property had been effectively abandoned and it would have been relatively easy for the Policyholder to have the property looked after while she was away and the Ombudsman concluded that Insurers were reasonable in rejecting the claim.

In conclusion it is my view that the Ombudsman and indeed Courts in this Country would take a similar view and as long as a Policyholder has taken reasonable steps to look after and maintain their property and has not “abandoned” it then Insurers will have difficulty avoiding liability. Clearly each case will be taken on its merits and the crux is whether the Policyholder has acted reasonably.

Alan FitzGerald, FCII., FCILA., FUEDI-ELAE.

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