The majority of courts considering the issue of whether “vacant” and “unoccupied” are ambiguous terms and whether they can mean different things hold that they are not ambiguous, that “vacancy” is associated with the lack of inanimate objects in a home, and that “unoccupied” is associated with the absence of human beings living at the property on a regular basis. Relying on two 80-year old California Supreme Court cases, the Court of Appeal of California recently ruled in accordance with the majority view on these issues.

In Aslanyan v. Pacific Specialty Insurance Company, 2012 Cal. App. Unpub. LEXIS 3183 (Ct. App. Ca. Apr. 26, 2012)¹, the Court of Appeal of California analyzed the issues of what vacant and unoccupied means in a property policy where nobody lived at the home but where construction activities were ongoing. The Court of Appeal affirmed the lower court’s determination that the loss was excluded, in part because the property was considered vacant and unoccupied.

The plaintiff in Aslanyan purchased a home in April 2007. While nobody lived in the home from the date of closing through the date of a reported theft at the home, plaintiff hired workers to do renovation work at the home and plaintiff also moved some personal property into the home. Plaintiff alleged that construction materials were stolen from the home in March of 2008.

The Pacific policy included an occupancy endorsement excluding coverage for loss occurring while the home was “vacant, or unoccupied beyond a period of sixty consecutive days.” “Vacancy” was defined by the Pacific policy as “when the unscheduled personal property or [a] substantial portion thereof has been removed for a period of sixty (60) days.”

The term “unoccupied” was not defined by the Pacific policy, but the Court of Appeal referred to a 1941 California Supreme Court decision that interpreted the meaning of “unoccupied” in another first party policy. Id. at *12 (citing Foley v. Sonoma County Farmers’ Mut. Fire Ins. Co., 19 Cal.2d 232 (1941). In Foley, the California Supreme Court distinguished “vacant” (the removal of objects from the dwelling) from “unoccupied” (a dwelling house will not be regarded as occupied unless it is the home or dwelling place of some person living and sleeping there habitually”). Id.

The Court of Appeal then concluded that the property was unoccupied because the plaintiff and his family did not habitually sleep at the property for 60 days immediately preceding the loss. Id. at * 13. The court was not persuaded by the fact that construction workers occupied the premises based on a 1929 California Court of Appeal case determining that the dispositive issue with regard to occupancy is whether someone actually resides at the home. Id. (citing Mauck v. Northwestern Nat’l Ins. Co. 102 Cal. App. 510 (1929)).

Aslanyan is notable in that it concludes that daily construction activities by the insured’s contractors did not constitute occupancy of the insured property. It appears that the court concluded that 24-hour residency in the premises on a regular basis, not mere use of the premises for construction purposes, was necessary to serve the purpose of the occupancy endorsement.

¹ Reproduced by Robinson & Cole LLP with the permission of LexisNexis. Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.  All rights reserved.  No copyright is claimed as to any portion of the original work prepared by a government officer or employee as part of that person’s official duties.