Homes Alone: Managing your Vacancy Exclusion in Difficult Times
May 04, 2021
With Canada's aging population, cases involving vacancy exclusions will likely pop up more frequently over the next few years as older homeowners require more care and explore alternative living solutions. Homeowner policies include vacancy exclusions to protect insurance companies from damages that may occur because no one is present in the home for an extended period of time. The details and definitions of the policy wordings may vary, but the rationale and tests remain consistent.
The issue of vacancy exclusions recently arose in a summary judgement motion brought by the insurer in Gregson v CAA Insurance. The home owner, Ms. Gregson, moved into a retirement home in October 2016 on a trial basis after her physical and cognitive health began to decline. After she had left the home, she was hospitalized on occasions. Water damage was discovered at her home on March 17, 2017. Estimates for repairs ranged from $114,405 to $165,997.
No one had resided at the property from when Ms. Gregson had moved into the retirement home. Ms. Gregson passed away before the summary judgement motion. However, the plaintiff’s estate argued that at the time of the leak, there was still a possibility that she may have moved back home with care.
Some steps were taken to avoid the house being deemed vacant. Ms. Gregson had appointed her lawyer to act as power of attorney. He did take steps to check in on the property after the plaintiff had moved out. He would visit the home every couple of weeks but it was inconsistent and no one spent nights or had access to the property. However, neither Ms. Gregson nor her power of attorney notified the insurer that she would be away from her home for an extended period of time.
The insurer took the position that the property was vacant as defined in the policy and as such the claim for damages was excluded under the policy. During oral arguments the insurer advised that it was no longer advancing arguments with respect to a material change in risk or exclusions for freezing during the usual heating season.
The Court confirmed that this was an appropriate case for summary judgement as the issue of liability was clearly severable from damages. Furthermore, as Ms. Gregson was deceased there would be no forthcoming viva voce evidence and the documentary evidence was sufficient to allow the court to reach a fair decision on the merits.
The policy excluded damages that occurred after the dwelling, to the knowledge of the insured, had been vacant for more than 30 consecutive days. Vacancy was further defined as occurring when "all occupants have moved out with no intention of returning, and no new occupant has taken up residence" regardless of the presence of furnishings.
The Court affirmed the common law definition of vacancy as inoccupation or the lack of the habitual presence of human beings. A property would be deemed vacant if the occupant moved out with no intent to return as an occupant. Conversely if the occupant intended to return, it would not be vacant.
Given the definition of wording in the policy and common law, Ms. Gregson's intention and capacity were a central issue. The Court confirmed that it had to be more than Ms. Gregson's desire to return home as the test required an objective intention to return to the home.
The Court considered the plaintiff's arguments that as she was found to have lost capacity 10 days after the damage was discovered and as such there was a possibility she could have returned home. However, the medical evidence of her condition was persuasive enough that even if she had not been formally deemed incompetent that the situation did not crystallize only after the damage. The evidence suggested that she was not capable of forming an intention at the material time.
Ultimately, there was insufficient evidence to find an objective intention to return to the home. There was no concrete plan of discharge or evidence that the support services which would have been required to allow Ms. Gregson to return to her home had been arranged.
The Court determined that as there was not sufficient evidence of an objective intention to return to the home the vacancy exclusions did apply to the claim. Summary judgement was granted to the insurer.
While most homeowners are aware of vacancy exclusions, many believe that having neighbours, friends or others check in on the home on a regular basis is enough. However, the Courts will generally not accept this as sufficient. If an occupant leaves the home, without evidence of an objective intention to return, the home will be deemed vacant.
It is important to disclose changes to the insurer and seek advice on how best to avoid potential exclusions.