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BROKERS - Liability - Negligence, obtaining adequate coverage

Tuesday, February 25, 2020 @ 7:54 AM  

Lexis Advance® Quicklaw®
Appeal by the plaintiffs from the dismissal of their action for damages against the respondent insurer and insurance broker. The appellants’ property was insured pursuant to a homeowner’s policy issued by the insurer, obtained by the broker, and renewed on a yearly basis. In 2012, the appellants started a medical marijuana grow operation in an outbuilding on the property and upgraded the electrical system without informing the respondents. In 2014, the outbuilding was damaged by fire. The insurer notified the appellants it was voiding the policy on the basis that had it known of the change in use of the outbuilding it would have declined to endorse the policy. The trial judge found the presence of the grow operation was a material change in risk.

HELD: Appeal dismissed. The trial judge applied the correct legal test for finding a material change in risk. There was ample evidence to support the finding that the grow operation was material to the risk. The trial judge was not required to decide whether the appellants’ knowledge of change in risk material to the insurer was to be established by the insurer on a subjective or objective basis as she found the appellants knew the changes in question were material to their insurance. No causal connection between the appellants’ breach and the cause of the loss was required. The trial judge made no reviewable error in concluding the appellants did not show the broker breached the standard of care owed to them. Her finding the appellants would not have disclosed the grow operation if the broker made inquiries was fatal to their argument the broker did not meet the standard of care.

Schellenberg v. Wawanesa Mutual Insurance Co., [2020] B.C.J. No. 72, British Columbia Court of Appeal, M.V. Newbury, G.B. Butler and P. Abrioux JJ.A., January 22, 2020. Digest No. TLD-February242020004