Saskatchewan court finds brokerage did not make clear to policyholder an exclusion for vandalism based on vacancy

The Saskatchewan Court of Queen’s Bench recently found that a brokerage had breached its duty of care by not informing a client about a policy coverage exclusion for vandalism that applied immediately upon his rental property being vacated.
In Cheecham v. Saskatchewan Government Insurance, the plaintiff, Roy Cheecham, brought an action against his insurer, Saskatchewan Government Insurance, and his insurance broker, Meadow North Agencies Ltd., after the insurer denied coverage for damage sustained to his vacant rental property.
Cheecham’s property sustained $30,000 in damage in 2004 shortly after his tenants had vacated the property. His claim against his insurer was dismissed following a summary judgment application on the basis that the policy excluded coverage for vandalism if the property was vacant.
Cheecham argued he was not aware of the vacancy exclusion or that the coverage ceased immediately upon the vacancy.
A booklet outlining his policy stated that coverage for vandalism while the property was vacant was excluded. It also stated the policyholder was required to notify the insurer within 30 days if the property became vacant.
“The insured was operating under the assumption that during those 30 days he would be coved for vandalism,” author Kim Yee wrote in the Harper Grey LLP bulletin detailing the case. “That was not the case, as his coverage ended immediately upon vacancy.”
The court found Cheecham attended at Meadow North’s office in 1993, when he completed an application for insurance for the property. The policy was issued and renewed annually thereafter.
The court found no evidence that Cheecham was provided with the booklet that outlined the coverage and the exclusions, nor was he advised about the fact that coverage would not be provided immediately when the property became vacant.
The court concluded it was reasonably foreseeable that policyholders might think they had 30 days to advise of the vacancy.
Thus, the court found Meadow North had breached the duty of care owed to the plaintiff and that it was a proximate cause of the loss. The plaintiff was awarded $30,000 in damages, plus pre-judgment interest, and costs.