Warranties, Material Change of Risk, Relief from
Forfeiture and Reasonable Expectations: Abell v. M.J. Oppenheim
In the recent British Columbia decision of Abell
v. M.J. Oppenheim 2005 BCSC 1715 the question arose as to whether
the owner of a floating home voided his insurance coverage by failing
to comply with his warranty that the floating home was permanently
moored and his failure to advise the insurer of a material change
Mr. Abell became the owner of a floating home. Mr.
Abell called the insurance agent and advised that he had purchased
a lot in Queensgate floating home community and that he intended
to move the floating home to that location. The policy included
coverage for fire loss. The policy contained a provision which stated,
"It is warranted that the dwelling is permanently moored at
the location described on the Coverage Summary page. Breach of
this warranty shall render this policy voidable at the option of
The floating home was never installed in Queensgate.
The purchase of the lot never took place. For a few weeks the floating
home was simply tied by rope to some pilings in Queensgate. The
owner of Queensgate demanded in writing that the home be removed
from the location. Mr. Abell never complied with Queensgate's demand.
Mr. Abell never advised the insurer the home was not permanently
moored nor that he had not secured the lot for moorage. Queensgate
had the home towed away from their facility and tied the house by
rope to some offshore pilings in the riverbed. In the area there
was no water or other utility service, no fire protection, and no
wharf giving dry-foot access to the floating home. The floating
home caught fire and burned. The insurer denied coverage based on
breach of warranty and failure to advise of a material change in
The court found that Mr. Abell had received the policy in the mail
with a letter recommending that he read the documents that came
with it. The warranty was on prominent display in the policy endorsement.
"It was not hidden away in some obscure corner that no reasonable
person would ever pay attention to. " The words were in bold.
The warranty was reasonable. There was a nexus between the breach
of warranty and the loss. At the location in Queensgate the home
would have been part of a community of floating homes which would
have enhanced the chance of early detection of a fire. There would
have been easy access to the house from the shore via the wharf
and dock system. And critically, there were fire hydrants on the
shore in the developed part of the community. The insurer was entitled
to decline to pay the claim.
The court also found that the contract was subject
to s. 13(1) and s. 126 of the Insurance Act of B.C. requiring
disclosure of material facts to the insurer in the application or
proposal for the insurance. The court held that there was a material
change in risk and Mr. Abell was under a positive duty to disclose
it to the defendant. Interestingly the court did not discuss the
fact that the failure to disclose occurred after the policy was
in place, not during in the application or proposal for insurance.
It appears that the court found that if an applicant in an application
or proposal sets out certain material facts, which then change during
the course of the policy, the insured has a positive duty to inform
Mr. Abell other argument was also shot down. He argued
that he should be afforded relief from forfeiture pursuant to the Insurance Act. The court found that the section applies to
post-loss failings by an insured. The section could not assist Mr.
Abell for his pre-loss actions.
Finally Mr. Abell argued that to deny him coverage
would defeat his reasonable expectations under the policy. The court
stated "If it was reasonable for Mr. Abell to expect that he
would be insured after telling his insurer one thing about the material
risk of the home's location and then allowing the home to be put
somewhere else, and after he failed to comply with his obligation
to moor the house permanently, then his position might have some
merit. But I find that no reasonable person in Mr. Abell's position
could genuinely believe that he should still have insurance coverage
after failing to comply with the policy in two such important particulars."
Rui M. Fernandes
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