When is a home deemed 'vacant' under an insurance policy? When is it that the owners are merely occupying it in a reduced fashion and an insurer remains liable to pay out insured losses? The British Columbia Court of Appeal turned their minds to this question this recent decision.
In this case, the Plaintiffs were two friends who owned a home jointly in Surrey, British Columbia. The home was insured under a homeowners policy issued by the Defendant. Sometime in late 2007, the Plaintiff’s decided to sell the home.
One Plaintiff, Mr.Peebles, lived elsewhere but checked on the home a few times a week. The second Plaintiff, Mr. Quinn, worked three weeks at a time in the Northwest Territories, followed by one week off which he spent in British Columbia. Mr. Quinn had an “on and off” relationship with his girlfriend. While his relationship was on, he would stay at his girlfriend’s home, returning back to his house when his relationship was off.
On April 26, 2008, a fire damaged the Plaintiffs’ home. The Plaintiffs filed a Proof of loss. The Defendant denied coverage on the basis that a material change in risk had taken place as the property was “vacant”.
By the date of the fire, most furniture had been removed from the home and the only items remaining were one or two hutches, a sleeping bag, an alarm clock, a shop vac, a few tools, a few personal items, clothing and food. In the 30 days prior to the fire, the second Plaintiff Quinn had spent at least one night at the home.
The Trial Judge found for the Defendant, stating that there was a material change in risk because the “nature of the occupancy had changed dramatically”due to the reduced occupancy of the home. The trial judge did not find that the home had been vacant, merely that the reduced nature of the occupancy affected the risk to the insurer and would have affected the premiums had the insurer been aware. The Plaintiffs appealed.
The Court of Appeal overturned the trial judge’s decision, entering judgment for the Plaintiffs. The Court of Appeal found that it was bound by an earlier decision of the British Columbia Court of Appeal. Since all policies have a statutory condition protecting an insurer from liability for loss occurring when a building was “vacant or unoccupied for more than thirty consecutive days” this meant that the insurer should be said to have accepted the risks associated with a vacancy for a period of thirty days or less, no matter how infrequently the home is occupied.
The Court of Appeal reviewed the Trial Judge’s decision and noted that the Trial Judge found that the home had not been “vacant”. The Court of Appeal also pointed out that a period of vacancy of thirty days was not per se a material change in risk. If the policy allowed a vacancy of up to thirty days, that it had to permit reduced occupancy within that 30 day period as well.