The Defendant Insurer was not liable to pay the Insured’s claim under an insurance policy for his floating home which burned down, because the Insured voided the policy by failing to keep the home permanently moored and by failing to inform the Insurer of the material change in risk

Abell v. Underwriters, Lloyd’s, London, [2005] B.C.J. No. 2679, British Columbia Supreme Court

The Plaintiff purchased a floating home and had it towed to a temporary mooring place. The Plaintiff signed an interim agreement to purchase a permanent mooring lot to which he intended to move the floating home. The Insurer subsequently issued a policy of insurance for the floating home which included coverage for fire loss and an endorsement which stipulated that the Insured warranted that the dwelling would be permanently moored at the location described on the Coverage Summary page and that a breach of the warranty rendered the policy voidable. When the Plaintiff moved the floating home from a temporary location to the permanent mooring lot, he advised his Insurer who issued a second policy which stipulated that the location of the floating home was to be at the permanent mooring site.

When the Plaintiff’s deal to purchase the permanent mooring site fell through, the owner of the mooring site removed the floating home and towed it away to a temporary location where no access to fire protection services existed. The floating home subsequently caught fire and burned, resulting in a total loss. The Insured submitted a claim which was subsequently denied resulting in the present action.

The Insurer argued that the floating home endorsement contained a warranty that the Plaintiff would permanently moor the floating home at the location noted on the Coverage Summary page and that the Plaintiff failed to comply with this warranty. The Court agreed. In addition, the Court found that any reasonable person could be expected to read, understand, and implement the warranty set out in the policy summary. Moreover, there was a nexus between the Insured’s breach of warranty and the loss. If the Insured had performed the warranty, the floating home would have been permanently moored in the developed part of the permanent mooring site with access to nearby fire hydrants and the loss would have been preventable. Accordingly, the Court held that the Insurer was not required to pay the claim.

The second issue was whether the change in location from the permanent mooring site to the temporary location constituted a material change in the Insurer’s risk which the Plaintiff was under a positive duty to disclose. The Court found that the floating home’s location would influence the Insurer’s decision to extend coverage and the premium charged for coverage, thus satisfying the test for materiality. The failure to disclose the material change to the Insurer voided the policy.

The Plaintiff’s action was dismissed with costs.

To stay current with the new case law and emerging legal issues in this area, subscribe here.