An appellate court in Georgia recently held that the “occasional rental” exception to a rental exclusion does not apply when the insured has no intention of using the property as a residence following the termination of a lease to tenants. Corbin v. State Farm Fire & Cas. Co., 388 Ga. App. 684, 790 S.E.2d 831 (2016).

The insured entered into a month-to-month lease of a house with tenants while she considered selling the property. Six days after executing the lease, one of the tenants slipped and fell at the property and sued the insured. The insured sought coverage under her homeowner’s policy with the insurer. The insurer sought a declaration that it did not cover the lawsuit based on the policy’s rental exclusion. The insured and tenants argued that the exception to the rental exclusion for occasional rentals applied, and therefore the policy provided coverage. The “occasional rentals” exception, however, states that the rental exclusion does not apply to rentals “on an occasional basis for the exclusive use as a residence.” The trial court granted partial summary judgment in favor of the insured and tenants, finding that the lake house was an insured location but noting a “factual” dispute concerning whether the “occasional rental” exception applied. The insurer appealed.

The appellate court reversed and granted summary judgment in favor of the insurer, finding that the rental exclusion applied. The appellate court found that the “occasional rental” exception to the rental exclusion did not apply because the insured did not intend to continue to use the property as a residence following the termination of the lease.