Clarification of the term "Unoccupied" in Insurance Disputes

In Khoshmukhamedov, et. al. v. State Farm Fire and Casualty Company, Izatullo Khoshmukhamedov and Zoulfia Issaeva (“Plaintiffs”) filed an action against State Farm Fire and Casualty Company (“State Farm”) because State Farm refused to pay Plaintiffs under their homeowner’s insurance policy for losses sustained when water pipes burst and flooded the Plaintiffs’ home while Plaintiffs were out of the country.  This action presents the issue of whether or not Plaintiffs’ home was “unoccupied” when the water damage occurred, such that, State Farm was not obligated under the homeowner’s insurance policy to cover the loss. 

In 2006 Plaintiffs moved into a home in Potomac, Maryland.  Plaintiffs insured their home with State Farm.  In October 2008 Plaintiffs left their Potomac home intending to return in February 2009.  Because Plaintiffs intended to return they left many personal items including a furnished home and car in the garage.  Prior to leaving, Plaintiffs made arrangements with their friend and translator, Mikhail Immerman (“Immerman”), and their neighbor, Khushi Kalotra, to monitor and care for their Potomac home.  In addition, before leaving Plaintiffs had their cable, television and telephone services turned off and Plaintiff Khosmukhamedov instructed Immerman to have the electricity disconnected by the power company.  Immerman informed Plaintiff Khosmukhamedov that the electricity had successfully been disconnected.  Plaintiff Khosmukhamedov believed that because the pump that supplied water to the Potomac home ran on electricity, once the electricity had been turned off water would not flow through the pipes in the home.  However, the water pump continued to receive electricity throughout the winter, and, at some point prior to February 6, 2009, the water pipes in the home froze and burst. 

Immerman acting as the Plaintiffs’ representative contacted State Farm.  State Farm denied Plaintiffs’ claim on grounds that the home was “vacant/unoccupied” at the time of damage, and, as such, the damage was not a covered loss. 

Plaintiffs challenged State Farm’s denial of coverage on grounds that the word “unoccupied” is ambiguous, and, therefore, should be construed against State Farm.  However, the United States District Court for the District of Maryland rejected this argument.   In support the District Court cited two Court of Appeals of Maryland cases, Agricultural Insurance Co. of Watertown, N.Y. v. Hamilton, 33 A. 429 (1895) and Norris v. Connecticut Fire Insurance Co. of Hartford, 80 A. 960, 961 (1911).  These cases, both containing “vacant or unoccupied” language, ruled that the meaning of the word “unoccupied” in an insurance contract is not ambiguous.  Thus, according to the District Court, “under Maryland law there can only be one interpretation of the word ‘unoccupied’ as written into an insurance contract.”  The District Court went on to do a factual comparison of the facts in the case before it to the facts in Hamilton and Norris.  This comparison included a discussion of how an individual’s “intent to return” is not relevant in determining whether or not a home is unoccupied and further how leaving behind a substantial amount of personal property does not render a home occupied.

            Ultimately the Court concluded that in light of Plaintiffs’ extended absence from the home, the utilities being shut off, the infrequent visits to the home and lack of overnight stays, there was no genuine dispute of material fact with respect to whether or not the home was occupied when the home sustained water damage as a result of burst pipes, and, as such, the Court granted Summary Judgment in favor of State Farm.