Insureds should get their own property valuations

An insurer owed no duty of care to recommend a property valuation assessment

Insurance law – Homeowner’s insurance – Replacement cost value – Duty of care – Valuation of property – Negligence of insured

Lynch Estate v. Bay of Quinte Mutual Insurance Co., [2023] O.J. No. 2856, 2023 ONSC 3855, Ontario Superior Court of Justice, June 27, 2023, P. Hurley J.

The insured claimed against his home insurer after a fire rendered his house uninhabitable. The insurer paid the policy limit of $220,000 for the building loss and $60,000 for contents, although the limit for contents was $111,000. The insured did not claim against his broker, instead alleging that the insurer was negligent. The insured’s position was that the building replacement cost value should have been at least $320,000 and that he was entitled to an additional amount for contents. The insured argued that the insurer owed a duty of care to advise the insured to have the property valuation assessed for the purpose of determining the building limits.

The court determined that the insurer was not negligent because there was no duty of care. It was clear that the plaintiff did not rely on anything the insurer did in its calculation of the property value. The insurer had sent an employee to attend at the property after the policy was issued to determine if it was an acceptable risk, including the replacement cost value stated in the application. While the insurer’s replacement cost value calculation was part of the inspection process, it was not done for the purpose of determining the replacement cost value for the policy. If the plaintiff was correct about what the replacement cost value should have been, then the responsibility lied with the broker, not the insurer.

Although the insurer was not negligent and owed no additional damages with respect to building coverage, the court found that the actual cash value of the contents claim was more than the policy limit. As such, the insured was liable for the unpaid balance up to the contents limit.

This case was digested by Joe Antifaev, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Joe Antifaev at jantifaev@harpergrey.com.

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