An insured brought an action against his insurance broker for failing to advise him about an exclusion in his policy.The action was allowed and the insured was awarded damages.

[2011] S.J. No. 500

2011 SKQB 297

Saskatchewan Court of Queen’s Bench

B. Scherman J.

August 2, 2011

The plaintiff, Mr. Roy Cheecham, brought an action against his insurer, Saskatchewan Government Insurance, and his insurance broker, Meadow North Agencies Ltd. (“Meadow North”) after coverage was denied for damage sustained to his vacant rental property. The claim against the insurer had been dismissed following a summary judgment application on the basis that the policy excluded coverage for vandalism if the property was vacant. The issues left to be decided by the Court were whether Meadow North had breached a duty owed to the plaintiff as his broker, whether the breach was a proximate cause of the loss, and whether the plaintiff had breached his duty to advise of a material change in the risk thus voiding the policy.

In 1993 the plaintiff attended at Meadow North’s office and completed an application for insurance for the property. The policy was issued and renewed annually thereafter. A booklet that outlined the policy stated that coverage for vandalism while the property was vacant was excluded. It also stated that the plaintiff was required to notify the insurer within 30 days if the property became vacant. The insured was operating under the assumption that during those 30 days he would be coved for vandalism. That was not the case, as his coverage ended immediately upon vacancy.

In 2004, the property sustained $30,000.00 in damage shortly after the plaintiff’s tenants had vacated the property. The plaintiff asserted that he was not aware of vacancy exclusion.

The Court found that Meadow North breached the duty of care owed to the plaintiff and that it was a proximate cause of the loss. There was no evidence that the plaintiff was provided with the booklet that outlined the coverage and the exclusions, nor was he advised about the fact that coverage would not be provided immediately when the property became vacant. It was reasonably foreseeable that a policy holder may think that they had 30 days to advise of the vacancy. Meadow North had a stringent duty as an insurance broker to provide information and advice to the plaintiff about his insurance coverage, including any gaps it may have had.

The plaintiff was awarded $30,000.00 in damages, plus pre-judgment interest, and costs.