Case Review by Oseye Cohen, A.I.M.A, Real Property Administrator/Market Analyst
Nejim v. Intact Insurance Company, 2016 ONSC 5852
ISSUE: LOSS OR DAMAGE NOT INSURED
1. The Issue at Trial was heard at the SUPERIOR COURT OF JUSTICE, August 8, 2016 – Loss of insurance coverage due to vacancy
2. The Relevant Facts: Applicants; Nurrendin and Tracy Nejim asked the Court for relief after their rental property at 126 Brookfield St. in Denfield, Ontario experienced significant water damage while covered under a rental insurance policy with Intact Insurance Company, the Defendants. The Nejim’s believed that they were entitled to the repayment of expenses incurred by them for repairs they made to the home in 2014 after Intact Insurance Company denied their claim.
3. The Issues: On January 7, 2014, sever water damage took place after a frozen pipe had burst. The rental property was formerly the Nejim family home for 15 years, and during that time they maintained a standard residential home owner’s policy. In the fall of 2013, they decided to move and rent it out. With the anticipation of future tenants, they obtained a rented dwelling policy. From mid-December until the date of the damage on January 7, 2014 no one was living in the home. Nor did anyone even periodically spend the night. The Nejim’s argued that while they were not living there, they “still regularly attended at the home and also made arrangements for friendly neighbours to "check in on it”.
In the evening of January 7, a pipe underneath the kitchen sink broke discharging water and causing flooding and extensive damage. This was eventually noticed by a neighbour who entered the home turning off the main water valve. The respondent insurer promptly retained folks to complete some initial repairs; essentially emergency work to clear debris and “dry out” the premises. However, all subsequent coverage was denied.
4. Why Did the Insurer Refuse Coverage? After careful interpretation of the policy, Intact pointed out a few key areas outlined in the details:
The governing policy section is clause 17(ix). It provides:
LOSS OR DAMAGE NOT INSURED
We do not insure loss or damage:
17. caused by water unless the loss or damage resulted from:
(b) the sudden and accidental escape of water or steam from within a plumbing heating, sprinkler or air condition system or domestic water container, which is located inside your dwelling.
……but we do not insure loss or damage:
ix. occurring while the building is under construction or vacant even if we have given permission for construction or vacancy
5. What is the policy’s definition of “vacant”?
Vacant refers to the circumstances where, regardless of the presence furnishings, all occupants have moved out with no intention of returning and no new occupant has taken up residence…….
For this reason, the respondents had refused coverage and will not pay for the applicant’s losses. The applicants claim their right to be reimbursed is clear on a reasonable interpretation of the policy.
6. How the SUPERIOR COURT OF JUSTICE resolved these issues:
The Court assessed the case and in two steps to determined: 1) That the loss fall under the policy. And, 2) There was no dispute that the house was vacant during that time and a periodical “check in” on the place does not amount to occupancy.
There is no ambiguity in the clause. The vacancy exclusion applies. The Application and claim for coverage was dismissed.
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