Exclusions - Vacancy: Material change in risk - Failure to notify

Duguay v. Lloyd's Underwriters

A plaintiff filed a claim against his insurer after his home was destroyed by fire. The plaintiff’s claim was dismissed.

[2012] N.B.J. No. 438

2012 NBQB 357

New Brunswick Court of Queen's Bench - Trial Division

R. Léger J.

October 31, 2012

On May 20, 2009, the plaintiff purchased a house which he insured with the defendant insurer. On August 25, 2009, the house was completely destroyed by fire. The plaintiff claimed against the insurer pursuant to the policy. The insurer denied the claim on the basis that it had not been notified that the property had been vacant from the time the insurance policy had come into effect until the date of the loss, contrary to an exclusion clause. Alternatively, the insurer alleged that the plaintiff had failed to disclose the fact that the property was tenanted which constituted a material change in the risk to the insurer.

Before the plaintiff could move into the home after he purchased it in May of 2009, several renovations needed to be completed. The insurance broker was advised that once the renovations were completed, the plaintiff would be living in the home. The broker’s understanding was that the renovations would take a few days. The renovations were never completed and the work on the home stopped in late July or early August. The plaintiff never moved into the home.

The plaintiff asserted that a family friend, Mr. McGraw, moved into the home and resided there between July 17, 2009 and the date of the fire. Mr. McGraw spent only a few nights a week at the home, had very few personal possessions there, and the home did not have electricity or running water at the time. Mr. McGraw also testified that he never paid rent.

The Court found that the property was vacant within the meaning of the policy for more than 30 days. Given the evidence, Mr. McGraw could not be considered an occupant who had moved into the home when the renovations ceased.

The Court noted that if Mr. McGraw had moved into the home within the meaning of the insurance contract, the claim would still not have been covered. If Mr. McGraw was a tenant, the plaintiff would have been obliged to notify the insurer of that fact as it constituted a material change to the insurer’s risk. The plaintiff had not done so. The plaintiff’s failure to notify his insurer of the change in circumstances voided the insurance contract. In the result, the plaintiff’s claim was dismissed.