By Darren K. Legato, Serafini, Michalowski, Derkacz & Associates, PC
Michigan Courts have spent an exorbitant amount of time discussing the issue of “Domicile” versus “Residency,” though it seems almost all of it recently has centered around claims for Personal Protection Insurance (“PIP”) benefits and the order of priority for payment of those benefits under the Michigan No-Fault Act, specifically MCL 500.3114. In fact, it was re-visited earlier this year in relation to PIP benefits when the Court of Appeals issued its published decision in Mapp v Progressive Ins Co.
Mapp was of great importance in the No-Fault world for its ultimate proposition:
[A] no-fault insurance policy may provide broader coverage than that mandated by the no-fault act, even with respect to a mandated coverage such as PIP benefits. That is, while a no-fault insurer must provide at least the minimum coverage required by statute (i.e., for relatives domiciled in a named insured’s household), it may provide coverage for a broader group of persons (e.g., for relatives residing in a named insured’s household).
In the non no-fault world, however, is where Mapp’s discussion of domicile versus residency becomes so intriguing. In Grange Ins Co of Michigan v Lawrence, the Michigan Supreme Court made clear that domicile meant something difference than residency. Domicile required an intent to remain, while a residency was a place of abode or dwelling. A person can have only one domicile but may have more than one residence. In Mapp, a question turned as to whether the plaintiff in that case was a “resident” of the same household as the policy’s named insured in order to provide coverage.
The Court in Mapp noted that Black’s Law Dictionary defined “residence” to mean “[t[he act or fact of living in a given place for some time” or “the place where one actually lives.”Likewise noting that Webster’s New World College Dictionary (3d ed) defined the term “reside” to mean “to dwell for a long time; have one’s residence; live (in or at).” This next sentence, though, was the most telling:
One could conceivably reside only in one’s domicile, reside in two households, or reside outside of one’s domicile.
With all of these different potential definitions of “residence” laid out by Michigan Courts, what does this mean for those looking for insurance coverage that is not mandated by statute and for which “residency” is required? For insurance policies that do not happen to provide a definition for “residency” or “resident,” it likely means the battle has only just begun.
Take this hypothetical situation: A person is seeking personal injury liability coverage under a homeowners’ or automobile insurance policy where they are not the named insured. This person sometimes stays overnight in the household of the named insured, may even have their own room, keep some belongings in the household, and have a family relationship to the named insured. Maybe they spend 30-40% of their time at the household of the named insured. But the person’s domicile is clearly in another location.
The insurance policy under which they are seeking coverage indicates it will provide coverage if they are related to the named insured and a “resident” of the named insured’s household. But the term “resident” is not defined. Will this person be provided coverage? The insurance companies surely will try to avoid coverage in this situation, while the person seeking coverage, and likely those injured by their actions, will have a say in this fight as well. There is no easy answer.
The Court in this case has a role to determine the contractual agreement between the insurer and the insured and effectuate the intent of the parties. The rights and duties of parties to a contract are derived from the terms of the agreement. But what happens when a term is argued to mean different things by different parties? A contract provision is considered ambiguous when its words can reasonably be understood in different ways. According to the Court of Appeals recent decision in Mapp, it seems that the term “Resident” or “Residency,” if undefined in an insurance policy, could lead the courts to hold it as ambiguous. This wouldn’t be the first time, but it has been awhile and is potentially worth revisiting. In Ortman v Miller, the court stated:
“Resident” has no technical meaning, and no fixed meaning applicable to all cases, but rather it has many meanings, and is used in different and various senses, and it has received various interpretations by the courts. Generally, the construction or signification of the term is governed by the connection in which it is used, and depends on the context, the subject matter, and the object, purpose, or result designed to be accomplished by its use, and its meaning is to be determined from the facts and circumstances taken together in each particular case.
If the courts are to find the term “resident” or “residency” to be ambiguous, they are likely to rule whichever way provides coverage under the policy. As a general rule, unless language of an insurance policy unambiguously so requires, a policy should not be construed to defeat coverage. Moreover, exclusionary clauses in insurance policies are strictly construed in favor of the insured. In other words, if finding our hypothetical person a “resident” provides them coverage under the policy, that is how the court is likely to lean. Or, if finding our person a “resident” of the household would trigger an exclusionary clause and negate coverage, the court is likely to find against residency and in favor of coverage.
Truth be told, there are so many different factual scenarios that it is impossible to predict an outcome without knowing the specifics of a situation. What if the person in our hypothetical was a minor of divorced parents with two legal residences but spends a disproportionate amount of time at one home rather than the other? What if the insurance application fails to list the person as a “resident” of the household? Do any of these things matter? Stay tuned, because 2024 may just provide us with some answers.
About the Author
Darren Legato is a Partner at Serafini, Michalowski, Derkacz & Associates, PC. Darren focuses his practice on personal injury, premises liability, first and third party no-fault, and general civil litigation.