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05 Oct 2020

Homeowner’s use of space heaters not a “material change in risk”

by Erika Hachey
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Pinder Estate v. Farmers Mutual Insurance Co., 2020 ONCA 413

Joyce Pinder purchased a home for her daughter and grandson in the late 1990s. Her daughter, Cindy, owned the contents of the home, and paid the utilities. Unfortunately, in 2004, a fire occurred, destroying the home and the contents. Cindy had left the home for her boyfriend's house during the evening, while her son was having a sleep-over at Joyce's. She left 'half a log' in the wood stove and three space heaters 'half on'.

The insurer denied the claim on the basis they were unaware the home was heated with space heaters. The Pinders brought an action for coverage under the policy, while the insurer counter-claimed for the amount they paid out to the mortgagee.

At trial, the jury ruled in favour of the insurer on factual questions. Based on the jury's answers, the trial judge concluded the Pinders failed to notify the insurer of the change in heating, which constituted a material change in risk, voiding the policy.

However, the Court of Appeal overturned the trial judge's finding on several grounds, including that there was evidence to support the jury's finding that the change in heat source constituted a material change in risk. The Court found there was no evidence by an underwriter or other qualified witness on what would constitute a material change in risk for an insurer.

While the Court of Appeal ultimately denied the homeowners’ appeal on other grounds, the court stated that if the appeal was only on the issue of material change of risk, it would have been allowed on the basis it produced a 'substantial wrong or miscarriage of justice'.

You can read Pinder Estate v. Farmers Mutual Insurance Co. in its entirety here.