Damage to a vacated rental property may not be covered by a home insurance policy

29. January 2010 0

Insureds were denied coverage on a home insurance policy for failing to advise the Insurer that their tenants had moved out and not returned the keys.

Wu v. Gore Mutual Insurance Co., [2009] O.J. No. 5201, December 2, 2009, Ontario Superior Court of Justice, M.J. Nolan J.

The Insureds held a policy of insurance on a home they rented to tenants. They were covered for fire and loss of rental income. The Insureds’ property was severely damaged by a fire on or about October 10, 2006. The Insureds’ tenants had moved out of the property on August 5, 2006 and the Insureds had not replaced them. When the tenants moved out of the property, they only returned the keys to the front door. The Insureds did not change the back door locks nor advise the Insurer that the previous tenant had failed to return the back door keys. The Insurer denied coverage on the basis of an exclusion clause which provided that the Insurer would not insure direct or indirect loss or damage “occurring after your dwelling has, to your knowledge, been vacant, even if partially or fully furnished, for more than thirty consecutive days”. The Insurer also denied coverage on the basis that the Insureds had breached statutory condition no. 4 of the Insurance Act, R.S.O. 1990, C1.8, which requires an Insured to advise an Insurer of any change material to the risk within the control and knowledge of the Insureds. The Insureds disagreed with the decision of the Insurer to deny coverage and commenced this action.

The Court found that the damage caused by the fire occurred after the rental property had, to the Insureds’ knowledge, been vacant for more than thirty consecutive days. Further, the Court found that the Insureds should have advised the Insurer when the last tenants moved out and that they had not returned all of the keys.

This case was originally summarized by Cameron B. Elder and originally edited by David W. Pilley.

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