Tenant Parking Lot: Premises – Claims Magazine

Tenant Parking Lot: Premises "Used In Connection With" "Residence Premises"?

ISSUE:

The insured rents an apartment in a six-unit building. The apartment has a parking area for tenants where the insured regularly parks his car. Does the building's parking lot constitute premises "used in connection with" the "residence premises" designated in the insured tenant's policy, thereby making the parking lot an "insured location" for purposes of liability and medical payments coverage under the tenant's ISO HO 00 04 04 91 policy? We will consider two scenarios: (a) the insured has an assigned space in the lot under the terms of his lease, and (b) the insured doesn't have an assigned space but can park his car wherever he chooses.

ANALYSIS:

The third part of the HO 00 04 04 91 policy's definition of "insured location" states in relevant part that "insured location" means "[a]ny premises used by you in connection with [the "residence premises"]. "Premises" is not defined in the policy; however, the dictionary defines it as "a piece of real estate; a house or building and its land." Webster's New Twentieth Century Dictionary 1420 (2d ed. unabridged 1983). Thus, the apartment building's parking lot, including any assigned space, is "any premises." The next question is whether the insured is using the parking lot and/or any assigned space "in connection with" his residence premises. Case law interpreting "in connection with a premises" is scarce.

In United Services Auto. Ass'n v. Parry, 761 P.2d 157 (Ariz. App. 1988), the court held that a subdivision's common area retention basin was not an "insured location." The basin was used for recreation as well as water retention. The court decided that it was not necessary to determine the precise reach of the "any premises used by you in connection with" policy language. Since the basin was owned by a homeowners' association (not individual homeowners), designed for runoff collection, and located at a distance from the insured residence, the basin was not premises used "in connection with" the insured residence.

However, at least two reported decisions have devoted more attention to what "in connection with" means. In Nationwide Mut. Ins. Co. v. Prevatte, 423 S.E.2d 90 (N.C. App. 1993), the court held that a trail which began on the insureds' residence property and ended on their neighbor's land was an "insured location." The insureds regularly rode ATVs on the trail and had also used it for walking and hiking for several years. Each walk and ride began and ended on the insureds' property. This pattern of use constituted use "in connection with" the insureds' property.

In Illinois Farmers Ins. Co. v. Coppa, 494 N.W.2d 503 (Minn. App. 1993), however, a hayfield adjoining the insured property was not an "insured location" because it was not "used . . . in connection with the residence premises." The court noted that the hayfield was not used as an easement of ingress to or egress from the residence premises. Not every field or pathway in the neighborhood which led to the insureds' residence was property "used in connection with" the residence.

These decisions give some guidance as to how the "used in connection with" language would apply to residential parking lots. First, we believe that the Parry decision was wrongly decided and not carefully reasoned. It seems more reasonable to conclude that common areas, no matter what their purpose, are for the use and enjoyment of all subdivision homeowners. In Parry, the basin retained runoff for the benefit of all property owners. It was also used as a recreation area. We believe that these are uses which an insured enjoys "in connection with" the insured premises.

However, the remaining two decisions are less problematic. While they may initially appear inconsistent, the different results reached by the two courts may be explained by the fact that the Prevatte court had evidence that the insureds regularly used the adjoining property for riding their ATV and hiking, while in Coppa the opinion was silent on whether evidence of frequent or regular use was presented. Both decisions can be construed to support the conclusion that, where property is frequently used for ingress to and egress from the residence premises, that property is "used in connection with" the residence premises.

These decisions suggest that the insured's parking lot is "used in connection with" his residence premises. Regular use, which was important to the Prevatte court, is present as long as the insured regularly uses the lot and any assigned space to park his car. If he regularly parks in the lot, it's reasonable to conclude that he also uses both the lot and any assigned space for ingress to and egress from his residence, a factor which was important in Coppa.

Even under the troublesome Parry decision, an assigned parking space may be "used in connection with" the residence premises because the space is close to the insured's apartment and isn't shared with others. Although Parry might suggest that the common parking lot itself, except for any assigned space, isn't property "used in connection with" the residence premises, we believe that the reasoning in that decision is vulnerable to criticism and does not inevitably preclude a determination that a tenant parking lot is "used in connection with" the residence premises.