Insurance law – Homeowner’s insurance – Business exclusion – Agents and brokers – Failure to advise of exclusion clauses – Vicarious liability – Breach of contract – Practice – Summary judgments

Lynk v. Cooperators General Insurance Co., [2019] A.J. No. 746, 2019 ABQB 417, Alberta Court of Queen’s Bench, June 5, 2019, J.M. Ross J.

The defendant insurer applied to summarily dismiss the insureds’ claim. The defendant broker took no position. The insureds were the owners of a property which contained their home and a shop which was used in a business operated by the insureds’ corporation, which was also a plaintiff in the action. The insureds insured the property in their name under a policy of home insurance issued by the insurer. The insureds’ numbered company was not an insured under the policy. The insureds did not purchase commercial insurance and sought insurance for the property alone.

Following a fire in the shop, the insureds sought coverage under the policy for damage to the building and its contents. The insurer denied coverage on the basis that the shop and its contents were used for business purposes.

When seeking insurance, the insureds claimed they disclosed that their business would make use of the property, that their business trucks would be kept in the shop, and oil changes and minor repairs would be done there.

The policy the insureds obtained included an exclusion for buildings or structures used in any way for business or farm purposes unless the consent of the insurer was granted. The insureds’ broker submitted a separate application for a commercial policy which the insureds did not ultimately procure. The insured gave evidence he never saw the application for the commercial policy and denied having been told that the shop could not be insured under the same policy as the house or that he did not have permission for business use of the property. Hence the broker was also named as a defendant.

The court ultimately dismissed the application on the basis that there were triable issues relating to the insurer’s potential vicarious liability for negligence or breach of contract of its agent, the broker. The court was not satisfied that these issues could be easily distinguished from the insurer’s potential liability in contract.

This case was digested by Cameron B. Elder, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter.