Insured Must Occupy Dwelling

Canada Requires Owner Occupant to Occupy Dwelling for Coverage to Apply

In Dang C. v. Industrielle-Alliance, Assurance Auto et Habitation Inc., 2022 QCCA 1739, the Court of Appeal for the Province of Quebec, an opinion in French, provided that Dang was the sole insured under a policy which covered "owner occupant" ("propriétaire occupant") and "your dwelling" ("votre bâtiment d'habitation").

Respondent had insured the house since 2012 and in May 2018, the house was damaged by fire. During its investigation, the insurer concluded that appellant had sporadically traveled to the United States from 2013 to 2016 and that she had been living in the United States since February 2016 without any intention to reside in Quebec.

The house was, however, continuously occupied by family members. At trial,Dang argued that she had every intention of returning to Quebec.  In addition she no longer had automobile insurance in Quebec, had acquired a new residence in Texas with her spouse, tried unsuccessfully to sell her house and obtained her permanent resident status and green card in the United States.

The insurer established with two independent insurance company representatives that they would not have renewed the policy had they known that the insured did not have any intention of coming back to live in the house.

According to Dang "occupant" means a person who exercises either personally or through another person, a real right on property without necessarily having a lease. As such, according to Dang the Superior Court judge erred in concluding that she did not occupy her residence at the time of the fire.

The Court of Appeal Decision

The Court of Appeal noted that there was no ambiguity in the policy and that the object of the contract is to insure the owner who occupies the residence. Dang did not fulfill the condition for at least two years prior to the fire.

The Court concluded that "owner occupant" must be interpreted according to its ordinary meaning and in a manner which an ordinary person who seeks insurance would understand. The Court of Appeal also added that it would not intervene in the decision of the trial judge to retain the testimony of the two independent insurance company representatives to support the decision to annul the policy.

The Court of Appeal concluded that an insurer may refuse to indemnify an insured if following a change of circumstances, the risk which materialized is no longer covered at the time of the loss.  In such a case the will of the insurer to never cover such a risk applies and is not an aggravation of a risk.

In Canada, the insurance policy must be analyzed and one must identify what risk of loss the insurer had the intention of insuring. Once the object of the insurance is identified, the court determines if the insurer had manifested the intention of insuring the risk which materialized, that is, a house not occupied by the insured.

The word "occupant" adds to the word "owner" the notion of living in the house insured. Furthermore, the expression "your dwelling" confirms the meaning which the insurer intended on giving to its contract which, until February 2016, conforms to what the Dang wanted to insure, her house in Trois-Rivières.

The insurer satisfied its burden of establishing that the insured no longer was "owner occupant" of the house.  The risk materialized was no longer what the insurer wanted to insure. The Court of Appeal further underlined that the insurer clearly demonstrated that it would have put an end to the contract had it been informed of the situation of unoccupancy.

ZALMA OPINION

Our neighbors in Canada agree with the courts in the U.S. that a policy that insures a residence premises and requires the insured to occupy the residence for coverage to apply. This is not an exclusion, but acts like one. Since insurance is a contract of personal indemnity - it does not insure the dwelling - it only insures the insured against the risk of loss of the dwelling. If the insured no longer lives in the dwelling - and this insured moved countries and became a permanent resident of Texas, she was not living in the home in Quebec and therefore the risk insured was changed and she could recover nothing under the policy. Americans, with homeowners policies, face the same problem. If I left my home and moved to Texas, my California Homeowners policy would not insure me against the California house's loss unless I advised the insurer, changed my coverage from a homeowners to a rental policy. Ms. Dang hid the change from her insurer and lost.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com

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