An insurer has won a court case over its denial of a fire insurance claim from the owner of a house that was being used for an illegal cannabis growing operation.
The house in West Kelowna, British Columbia was destroyed by a fire started by an unknown arsonist in 2012, three weeks after police found an illegal cannabis growing operation managed by a long-time tenant underneath a patio on the property.
The tenant was also found to have tampered with the property’s electrical supply wiring, which prompted the municipality to send a “Do Not Occupy” notice letter to Marjorie Drechsler, the property’s owner, and post signage on the property.
After the fire, the Canadian Northern Shield Insurance Company declined to pay out losses from the fire to Drechsler, which led to her suing the insurer.
In court, the insurer argued that the existence of the marijuana operation and the receipt of the notice constituted a “material change in risk” that Drechsler was obligated to disclose – and her failure to do so voided the policy.
In a judgement last week, Justice Steven Wilson of the Supreme Court of British Columbia sided with Canadian Northern Shield, concluding that Drechsler was indeed obligated to disclose a material change in risk and that she failed to do so.
“Here, the plaintiff took no action to resolve the change in risk to the property upon receipt of the letter, except for visiting the property and speaking with the tenant,” Wilson said in his ruling. “This is notable considering that the letter outlined several steps that the plaintiff was required to take in order to regain access to her property and to ameliorate the risk.”
Wilson concluded that Drechsler “is not entitled to relief from the consequences of her breach” and dismissed the lawsuit.
