Claim under a homeowner’s policy for a fire loss; Applicability of the doctrines of estoppel or waiver of defenses; Harbor Ins. Co. v. Continental Bank Corp. (7th Cir.); E Tackels v. Fantin; Castner v. Farmers’ Mut. Fire Ins. Co.; Smith v. Grange Mut. Fire Ins. Co.; Smit v. Kaechele; Effect of a blanket reservation of rights; Meirthew v. Last; Principle that the doctrines will not be applied to broaden a policy’s coverage; Kirschner v. Process Design Assoc., Inc.; Ruddock v. Detroit Life Ins. Co.; Insured’s burden to establish that the policy covers the loss; Distinguishing Heniser v. Frankenmuth Mut. Ins. Co. & McGrath v. Allstate Ins. Co.; Banks v. Auto Club Group Ins. Co. (Unpub.)

Concluding that a genuine issue of material fact existed and that estoppel or waiver of defenses applied, the court reversed the trial court’s order granting the defendant-insurer summary disposition in this action on a claim under a homeowner’s policy for a fire loss, and remanded for further proceedings. Defendant asserted that the loss was not covered because the property was not at the time of the loss being used by plaintiffs as their residence. Plaintiffs contended that defendant waived this defense by not asserting it in the first letter denying coverage. The 10/22/13 rescission letter alleged “misrepresentation at the time the policy was ‘accepted’ or renewed” on 11/ 9/12, “not the condition of the residence at the time of the loss. The part of the policy that defendant relied on to rescind the policy was General Policy Condition No. 4, Fraud and Concealment. The trial court ruled there was no evidence to support that plaintiffs committed fraud or concealed material facts.” While the rescission letter concerned whether the property was “owner-occupied,” it did not reference the date of fire. Because the 10/22/13 rescission letter did “not notify plaintiffs of the residency defense, the general rule of estoppel would preclude defendant from asserting this unstated defense to an action on the policy.” The court noted that defendant “denied the claim after a full investigation, so it had knowledge of all necessary facts to assert its residency defense when it denied plaintiffs’ claim.” Thus, it could be said that the “failure to assert the residency defense was a knowing waiver.” Further, the blanket reservation of rights in a 10/24/13 letter “provided absolutely no notice to plaintiffs of the later asserted defense.” Plaintiffs were correct that this case was readily distinguishable from Heniser and McGrath. Because the policy language here covered “the residence premises stated in the declarations, ‘used as a private residence by you,’ and grants permission to the insureds to leave the premises ‘unoccupied without limit of time,’ a genuine question of material fact” remained for a jury to decide whether plaintiffs continued to use the home “principally as a private residence” when the fire loss occurred.