Insureds misrepresented uses of property insured under homeowner policy

Insurance law – Homeowner’s insurance – Proof of loss – Material change in risk – Misrepresentation in obtaining insurance – Practice – Summary judgments

Chase v. Personal Insurance Co., [2019] B.C.J. No. 1066, 2019 BCSC 936, British Columbia Supreme Court, June 11, 2019, K.W. Ball J.

The defendant insurer brought a summary trial application seeking a dismissal of the insureds’ claim. The parties agreed it was a suitable case for the summary trial procedure.

The insureds had obtained a standard “principal residence” insurance policy from the insurer. At the time that the insureds obtained the policy, the insureds advised the insurer that the property was not used other than for residential purposes. Thereafter, the policy was renewed annually and the insurer was not informed of any change in the use of the premises. However, there were significant changes in the use and configuration of the property including use of the property as a farm, leasing a portion of the premises to a third party for a cow and calf operation, and use of the property to raise pigs. Further, a significant steel frame fabric covered building was installed on the property. That building collapsed because of a heavy snow load. The building was used to store farm equipment. The insureds made a claim under the policy to recover the losses resulting from the collapse. The insurer denied the insureds’ proof of claim on the basis of misrepresentation.

The court held that the uses of the premises by the insureds were misrepresented or otherwise the insureds failed to disclose changes to those uses which could not be insured by the insurer under a homeowner’s policy. Those uses included earning income from the lease of acreage to a third party, farming and being under a farm status, the presence of animals on the premises giving rise to income under the lease, and by the sale of pigs to established customers. As a result, the court granted the insurer’s application to dismiss the claim.

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. If you would like to discuss this case further, please contact Cameron B. Elder at celder@harpergrey.com.

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