What courts say about vacancy exclusion when elderly homeowner client moves to a care home

An elderly homeowner’s health takes a turn for the worse, necessitating a move into a care home. The client still owns her original home, which suffers water damage. The insurer denies the claim on the grounds that the property is vacant.

This is what happened to the late Agnes Josephine Gregson.

In Gregson v. CAA Insurance, released April 23 by the Ontario Superior Court of Justice, Judge Michael Gibson dismissed a breach-of-contract lawsuit against CAA Insurance Company (Ontario).

Michael Garvey — Gregson’s lawyer, estate trustee and litigation guardian — had tried to sue Gregson’s home insurer, CAA, on her behalf.

Just because no one is staying overnight and living permanently in the home does not, in and of itself, mean the home is vacant. But a key takeaway, from last week’s Gregson ruling, is that the homeowner’s insurance policy wording could mean that your client’s home is vacant (and therefore not covered) if there is no specific plan in place to have the client move from a care home, back into their original home, and have someone look after the client.

Gregson died in 2019.

The water damage occurred March 17, 2017, five months after Gregson left the property.

The property has not been repaired and the cost to repair was estimated at $114,000 by one contractor and another estimated $165,000, wrote Justice Gibson.

A plumber found that a pipe servicing the bathroom sink had become cracked.  Gregson had initially been taken to hospital in 2016. She was transferred to a retirement home and then returned to hospital in April and May of 2017.

In the lawsuit against CAA Insurance, Garvey had argued that Gregson had not left the property with no intention of returning.

In Gregson’s policy, the term “vacant” refers to the circumstances where, regardless of the presence of furnishings, “all occupants have moved out with no intention of returning, and no new occupant has taken up residence.”

As of March 27, 2017, a social worker had determined that Gregson was deemed incapable of personal care and incapable of managing her property. A 2016 document had granted Garvey power of attorney over Gregson. But that power of attorney had not been triggered by the time the water loss occurred.

So at the time of the loss, Garvey argued he could not have made a decision on Gregson’s behalf as to whether or not she would eventually return home. Instead, Garvey contended that Gregson had chosen to live in a retirement home on a trial basis, with the intention of revisiting the possibility of returning home.

Gregson’s condition did deteriorate towards the end of March of 2017. But Garvey essentially argued that, at the time of the March 17 loss, Gregson should not be deemed to have moved out of her home with no intention of returning.

But in ruling in favour of CAA Insurance, Justice Gibson found there was “no objective intention” to have Gregson return to the property.

“No support services to support Ms. Gregson in her home were hired.  There was no plan for live-in or daily assistance. There was no concrete discharge plan from her residence at the long-term care facility. There is no evidence that a personal support worker or social worker were arranged for,” wrote Justice Gibson.

“Even though Ms. Gregson might very well have had a desire to return home, and was unhappy to continue to reside in the long-term care facility, and there may have been transitory discussion of various proposals, no plan was ever made to accomplish this, and it was unrealistic in the circumstances given her physical condition and her lack of capacity.”

Justice Gibson cited Maracle v. Bay of Quinte Mutual Insurance Co. et al., released in 2010 by the Ontario Superior Court of Justice.

In early 2005, a home owned by Lillian Jane Maracle was found to have several inches of water in the basement. Maracle, in her 80s at the time, had been sent to hospital the previous June and released to a care home. She and her family continued to visit the home throughout 2004. The utilities were kept on and Maracle still had belongings in the home. Maracle lived in the care home until she died in January of 2007.

Under Maracle’s policy with Bay of Quinte Mutual, “vacant” means the occupant has moved out with no intent to return, Justice Rick Leroy wrote in his ruling.

“A newly constructed dwelling is vacant after it is completed and before the occupants move in.  Furthermore, the dwelling is also vacant when the occupants move out and before any new occupant moves in,” Justice Leroy wrote in Maracle. Ultimately, Justice Leroy ruled in favour of the insurer, on the grounds that an exclusion for vacant property applied in that case.

In the Bay of Quinte Mutual policy, the term “vacant” does not apply to an occupier who moves out of premises temporarily with the intent to return to live there, wrote Justice Leroy.

“That is not to say that a former occupant might not return for transitory purposes. The premises would be regarded as vacant within the meaning of the policy if the occupant moved out with no intent to return ‘as an occupant’” he wrote.

A home could still be considered vacant, for the purpose of exclusion, even if the utilities stay on some of the client’s belongings are still there.

“The thrust of the exclusion is that when no one lives or resides (and I use these terms as equivalent for the purposes of these circumstances, recognizing that lives encompasses a larger group than those who reside in a dwelling) in a dwelling the risk of loss or at least the cost of a loss is significantly increased,” wrote Justice LeRoy. “Accidents happen with or without occupancy. Mitigation is eviscerated in a vacant dwelling.”

In Maracle’s case, a broken water line caused water to be released and had that problem been discovered right away, it could have been mitigated.

“The premises are vacant where the occupant has moved out with no intent to return and before a new occupant has moved in. The presence of furnishings may make it more difficult for the insurer to prove that the insured moved out without intention to return but the fact of furnishings remaining does not mean necessarily that the insured intends to return to occupy the premises,” Justice LeRoy wrote in Maracle.

Feature image via iStock.com/Daisy-Daisy