‘Where You Reside’: Big ‘I’ Advocates on Your Behalf

Where you reside.

Those three words can make a big difference in a homeowners claim—and represent an issue that hasn’t gone unnoticed. Did you know that the Big “I” is working each day on behalf of you and your customers through technical affairs advocacy?

In 2004, the Big “I” Virtual University (VU) began publishing a series of articles on a potentially catastrophic but virtually unknown homeowners policy coverage gap resulting from this three-word phrase buried in the policy definition of an insuring agreement. The Big “I” Technical Affairs Committee brought the issue to the attention of ISO in 2005, though it appears to affect most non-ISO homeowners policies as well. Since that time, the Big “I” has been pursuing resolution of this problem with ISO, and the VU has developed a special resources area and webinar to educate agents.

We have documented dozens of court cases from the trial level to state supreme courts and actual claims through the VU’s “Ask an Expert” service, where insurers have denied consumers with otherwise valid claims because of “where you reside.” Many courts have found that, for coverage to be denied, exclusionary policy language must be “clear and conspicuous.” This language is not—and the reality is that the vast majority of agents do not know this issue can result in catastrophic loss to their customers.

In our white paper and webinar, we outline more than a dozen scenarios where non-residency situations can arise, from sudden job relocations to nursing home admissions to home renovations to military deployments. We have cited case law and real-life claims where these individuals and families, particularly the elderly, have lost their homes because of this all-but-invisible exclusionary policy language. This should not be a coverage issue but rather one of eligibility—we believe the language should be stricken from policy forms voluntarily, via regulatory directive or by state legislation. Sound underwriting practices can minimize the exposure from non-residency exposures. Customers should not be losing their homes because of onerous language buried in the “fine print”
of insurance policies.

To bring an end to this issue, Big “I” leadership made a direct appeal to ISO’s senior management. It led directly to an ISO proposal and a Big “I” counter-offer. Be sure to follow our progress in IA’s weekly e-newsletter, News & Views. The Big “I” Technical Affairs Committee continues to work with ISO, the Mid-America Insurance Conference, NCCI, ACORD and other organizations to address other potentially catastrophic coverage gaps.

Bob Rusbuldt is Big “I” president & CEO.