The trial court found that the home was an “insured location,” but that a factual dispute existed concerning whether the Corbins' tenancy constituted an “occasional rental” that fell outside the coverage exclusion generally applicable to rented premises.

The parties appealed.

The State Farm Policy

The State Farm policy provided that:

Coverage L [liability] and Coverage M [medical payments to others]

did not apply to:

bodily injury or property damage arising out of … the rental or holding for rental of any part of any premises by any insured.

The exclusion, however, did not apply:

to the rental or holding for rental of a residence of yours … on an occasional basis for the exclusive use as a residence[.]

The appellate court reversed, finding that the evidence showed that the Corbins' rental was not occasional and that the policy specifically excluded coverage for the bodily injuries that were the subject of the Corbins' litigation.

In its decision, the appellate court explained that occasional rentals were “episodic and temporary, not systematic and continuous.” An occasional rental, the appellate court continued, typically was “short term,” often had a special purpose (such as a vacation rental), and usually had a definite end point. Most significantly, the appellate court added, the occasional rental did not negate the assumption that the homeowner intended to “continue using the home as a residence, despite his or her temporary absence.”

It then found that State Farm had demonstrated that the rental to the Corbins had not been an “occasional” rental, citing the evidence that:

- Ms. Moss had listed her lake house for sale in 2010;

- Ms. Moss had stopped using it as a secondary residence prior to renting it to the Corbins in 2012;

- The Corbins had planned to rent the lake house at least through the summer of 2012 and also had expressed interest in buying the property; and

- The lease term had no end-point and could have continued indefinitely.

In the appellate court's view, the evidence did not support an inference that the parties only were contemplating a short-term vacation rental but, rather, “unequivocally” showed that Ms. Moss had no intention of returning to the property and using it as a secondary residence or vacation home if and when either she or the Corbins terminated the lease. Rather, the appellate court ruled, she intended to sell the lake home and to continue residing in her other home – which, in fact, was “exactly what she did.”

Because Ms. Moss had not rented her lake home to the Corbins on an occasional basis, the rental exclusion applied and the State Farm policy did not provide Ms. Moss with coverage for the Corbins' claims in their lawsuit, the appellate court concluded.

The case is State Farm Fire & Cas. Co. v. Moss, Nos. A16A1037, A16A1038 (Ga. Ct.App. Sept. 7, 2016). Attorneys involved include: Lloyd B. Hedrick Jr., for Appellant in A16A1037; Merlyn Butler Dodson, Robert Neal Katz, Atlanta, Virginia R. Moss, for Appellee in A16A1037; Merlyn Butler Dodson, Robert Neal Katz, Atlanta, for Appellant in A16A1038; and Lloyd B. Hedrick Jr., for Appellee in A16A1038.