First Department Seemingly Finds That Whether Ambiguity Exists in an Insurance Contract Depends on the Facts of the Case Rather Than the Terms of the Insuring Agreement

We had previously reported that in Dean v. Tower Ins. Co., the Court of Appeals had affirmed the First Department on a finding that the term "reside" in an insurance policy issued by Tower Insurance was ambiguous. This issue has appeared again in Tower Ins. Co. v. Zaroom, where the First Department has now found that the term "reside" is unambiguous. The Court specifically indicated that "under the circumstances of this action, as opposed to the circumstances in Dean v. Tower Ins. Co. of N.Y. (19 NY3d 704 [2012]), 'reside' is not ambiguous."

In Dean, the property owner was renovating the insured-property when a fire occurred. Although he did not reside in the house undergoing renovations at the time of the fire, he had spent a considerable amount of time at the house during the renovation, ate at the house and slept there on several occasions. By contrast, in Tower v. Zaroom, the Zarooms admitted that they did not reside at the insured-property. Clearly, therefore, where there was a question of fact in Dean as to whether the owner could be deemed to have "resided" at the insured-property at the time of the fire, there was no question of fact that the Zarooms did not reside at the insured-property.

The difficulty here is that, if the term "reside" was ambiguous in Dean, then it must likewise still be ambiguous in Tower v. Zaroom. The definition of the term has not changed, just the facts applied to the definition. Therefore, the effect of Dean and Tower v. Zaroom is that, unlike most other situations where ambiguity in an insurance contract is determined as a matter of law, whether the term "reside" will be found to be ambiguous is dependent on the factual circumstances of each individual case.