Homeowner's Insurance - Policies and Insurance Contracts - Notice - Material Change in Risk - Vacancy - Exclusions

Mah v. Wawanesa Mutual Insurance Co.

An insurer cannot deny coverage on the basis of an insured's failure to notify of a material change in the risk where the insurer has knowledge of the change in the risk, even if the knowledge is imputed to the insurer by way of agency.

[2013] A.J. No. 1164

2013 ABCA 363

Alberta Court of Appeal

J.E.L. Cote, J. Watson and B.K. O'Ferrall JJ. A.

October 31, 2013

An insured successfully appealed a dismissal of his action against an insurer for damages for losses caused by fires at his property.

The insured's property was insured under a homeowners policy with a policy period ending on June 30, 2006. The house was vacant as of May 2005. A notice of unfitness was issued for the property and sent to the insured. The notice was registered on title and posted on the door of the house. The insurer ordered an inspection of the property in 2005. The insurance brokerage hired an inspector who inspected the house and reported it was sound and could be made presentable. His photographs clearly showed the notice of unfitness on the door. The insurer received the report and the photos showing the notice, and then agreed to insure the house. Three fires occurred at the house from May to June 2006. The insured applied for coverage. The insurer denied coverage on the basis that the insured failed to give notice of the insured's abandonment of the property and the notice of unfitness which were material changes to the risk.

At trial, the court found the insured failed to notify the insurer of a material change to the risk being the notice of unfitness, and so his action was dismissed.

The court of appeal found for the insured on the basis that the insurer knew or ought to have known of the notice of unfitness. The court concluded the inspector was an agent of the insurance brokerage, which was in turn an agent of the insurer, and so knowledge of the notice was imputed to the insurer. Therefore, the insurer had knowledge of the unfitness notice and it could not maintain its argument that there was a failure to notify of that fact. The court also stated that the statutory condition only required that written notice be provided to the insurer's agent, which was the case here. The court mentioned the lack of any argument regarding whether the author needed to be the insured for the purposes of the statutory condition.