Cannabis Exclusion In Home Insurance Policies May Not Be Effective When Tenants’ Grow-Op Causes Loss

Article by Robert Gilroy

Despite the efforts of insurers to exclude coverage in habitational insurance policies for losses caused by cannabis cultivation or production, a recent Alberta case serves as a reminder that coverage may, nevertheless, apply where an insured’s tenant’s grow-op causes a loss.1 This is due to the existence of so-called “innocent insured” provisions in the Insurance Acts of Alberta, British Columbia and Manitoba.

Background

Home insurance policies have traditionally excluded coverage for losses caused by illegal activities. Many have also specifically excluded coverage for losses arising from illegal drug activity. With the Cannabis Act having come into force on October 17, 2018, Canadians may now legally cultivate up to four cannabis plants at a time in their dwelling-house.2 As such, some insurers have amended their policies to exclude losses caused by growing cannabis, regardless of its legality.

However, insurers in Alberta, British Columbia and Manitoba may still be at risk of cannabis-caused losses even with broad exclusions on the growing or production of cannabis in a dwelling.

The innocent insured provisions

The innocent insured provisions protect insureds who are not responsible for or complicit in intentional acts that cause damage. Specifically, exclusions barring coverage for losses caused by a criminal or intentional act or omission are of no effect vis- à-vis an insured person who does not:

  1. Cause the loss;
  2. Abet or collude in causing the loss; and
  3. Consent to the act or omission while knowing—or having ought to have known—that the act or omission would cause the loss.

The innocent insured provisions of the three provinces are all identical.3 British Columbia, Alberta and Manitoba brought their provisions into force in 2011, 2012 and 2014, respectively. Their enactment was a response to the Supreme Court of Canada’s (SCC) decision in Scott v. Wawanesa Mutual Insurance Co. [Scott].4 In Scott, the majority of the SCC held that, upon the insured plaintiff’s son intentionally setting fire to the plaintiff’s house, coverage was not available to the plaintiff, as the policy excluded coverage for loss caused by a criminal or wilful act of the insured.5

Recent cases

While the innocent insured provisions have received relatively little judicial consideration, the recent 2019 Alberta case of Lafferty v. Co-Operators General Insurance Co. [Lafferty] should serve as a reminder that an insurer in Alberta, British Columbia or Manitoba could be on the hook for damage caused by a tenant’s grow-up, notwithstanding a cannabis exclusion.6

In Lafferty, the insured plaintiffs owned a house in which their tenants were growing cannabis. The insureds had no knowledge of this. The grow-op caused damage to the house. After the insurer denied coverage based on an illegal drug operations exclusion, the insured sued for coverage. Ultimately, the Court held the innocent insured provision to be unavailable to these insureds, as the loss occurred in 2010, while the provision came into force in Alberta on July 1, 2012.7

Nevertheless, the Court in Lafferty commented that the innocent insured provision could have prevented the insurer from relying on the drug operations exclusion had the loss occurred after the provision came into force.8

One may contrast the Court’s comments in Lafferty with a recent decision out of Saskatchewan, a province that does not have an innocent insured provision in its provincial Insurance Act. In the 2018 case of Carteri v. Saskatchewan Mutual Insurance Co., the Court dismissed the insured plaintiffs’ claim for coverage after an explosion and fire severely damage their rental property.9 The explosion and fire evidently resulted from the tenants’ attempt to produce cannabis resin.10 The insurance policy contained an exclusion denying coverage for loss caused by the manufacturing of illicit drugs.11 The exclusion functioned to bar coverage, even though the insured property owners were arguably “innocent of any wrongdoing.”12

Rental properties are at a much higher risk

The innocent insured provisions afford protection to property owners when a tenant’s act or omission causes a loss, provided the insured is a natural person (as opposed to a corporation), and does not consent to or collude in such activity. This may prove problematic for insurers writing habitational policies in Alberta, British Columbia and Manitoba.

As rental properties already represent a higher risk exposure, insurers will want to underwrite such policies carefully, especially considering the increased likelihood of tenants seeking to grow marijuana plants in their dwellings legally, regardless of whether the property owner forbids it. Given that cannabis exclusions may not protect insurers in this situation, it is even more prudent that insurers require their insureds to conduct regular, periodic inspections of rental dwellings, in an effort to sniff out any cannabis production before it causes a loss.

Source: Mondaq

SSQ Insurance continues with its digital healthcare strategy

SSQ Insurance partners with HALEO and MindBeacon Group in an effort to give its group insurance plan members access to digital cognitive behavioural therapy (CBT). These partnerships stem from the insurer’s desire to find innovative ways to satisfy the needs of its customers, namely through the deployment of a digital healthcare strategy. Through this modern, online approach, SSQ Insurance is hoping to help its customers with mental health management, specifically through the prevention and early detection of sleep- and stress-related problems as well as mood and anxiety disorders.

“Through our agreements with HALEO and MindBeacon, SSQ Insurance plan members will have access to the latest CBT advances and obtain therapy that is adapted to their specific situation, whether for sleep disorders, anxiety, or depression. By taking preventive action in a timely manner, we can ultimately help control group insurance plan costs,” said Éric Trudel, Senior Vice-President of Strategy and Product Management, SSQ Insurance.

HALEO and BEACON each offer innovative cognitive behavioural therapies delivered online by qualified healthcare professionals. HALEO’s CBT focuses on sleep disorders whereas BEACON’s focuses on mild to moderate symptoms of anxiety and depression. In both cases, the insured determines the pace and platform on which the therapy is applied, making CBT a simple and accessible option.

Through these partnerships, SSQ Insurance proposes a variety of content on stress- and sleep-habit management in order to raise awareness about these problems and learn to recognize them. For those who feel concerned, they can also take a test to evaluate whether or not the HALEO or BEACON approach is right for them.

About SSQ Insurance
Founded in 1944, SSQ Insurance is a mutualist company that puts community at the heart of insurance. With assets under management of $12 billion, SSQ Insurance is one of the largest companies in the industry. Working for a community of over three million customers, SSQ Insurance employs over 2,000 people. Leader in group insurance, the company also sets itself apart through its expertise in individual life and health insurance, general insurance and the investment sector. For more information, please visit ssq.ca.

About HALEO


HALEO is an online sleep clinic with a mission to make evidence-based solutions accessible for people experiencing insomnia or poor sleep.  We provide professional, clinically-proven treatment that takes half the time and at half the cost of traditional Cognitive Behavioural Therapy, all without having to set foot in a clinic or join a long waiting list.  Our team of specialized therapists uses live videoconferencing, chat and an array of therapeutic tools integrated into our mobile sleep clinic app to help clients from across Canada overcome their sleep problems. For more information, please visit haleoclinic.com.

About MindBeacon Group
The MindBeacon Group is committed to providing evidence-based mental health therapy that is accessible whenever and wherever it is needed. With the goal of empowering individuals to live their best lives, MindBeacon Group brings ground-breaking innovation and current clinical best practice to the development and delivery of mental healthcare. Their clinical practice began with CBT Associates, a network of Greater Toronto Area-based clinics that provides in-person and virtual care to individuals across Ontario. In 2017, the BEACON™ digital platform was introduced as the first commercially-available clinician-guided iCBT service available across Canada. mindbeacon.com

SOURCE SSQ Insurance

 

CAGOC seeks media coverage of an Ontario millennial’s egregious auto insurance experience

NEWS PROVIDED BY

The Consumer Advocacy Group Of Canada

The Consumer Advocacy Group of Canada (CAGOC) is currently inviting media to contact CAGOC at the information below pertaining to a consumer-facing story about a millennial customer of Sonnet Insurance, a division of and underwritten by Economical Insurance Company. This customer is calling on Roger Dunbar, President of Sonnet and Rowan Saunders, President of Economical Insurance, to revise their management skills on customer strategy and policies of how Sonnet deals with millennial consumers. The story focuses on the Ontario-based auto insurance consumer, who in CAGOC’s opinion, has and continues to be egregiously mistreated by their insurer. Are companies that target millennial consumers actually better for millennials or is it just a marketing tactic? CAGOC is seeking Canadian consumers with similar stories and encourage them to contact us at the information below.

The story may be provided upon review, on an exclusive basis, packaged facts, documents, photos, and materials by CAGOC about the consumer’s experience. A letter from the consumer allowing media to discuss their case with the corporation, and various ministers who have been notified, will also be provided. Ministers notified include the Hon. Christine Elliott, Minister of Health and Long-Term Care (Ontario); Hon. Doug Downey, Minister of the Attorney General (Ontario); and Hon. Lisa M. Thompson, Minister of Government and Consumer Services (Ontario). Interested reporters are encouraged to contact CAGOC at the information provided below.

About CAGOC
The Consumer Advocacy Group Of Canada was founded in 2009 as a non-partisan, consumer-centric, organization consisting of Canadian researchers, advocates, and thinkers, who are tuned into assisting with Canadian consumer advocacy and mandated to create a fair and equal environment for all Canadian Citizens. Funded by members of the public, CAGOC pursues matters of public interest and/or concern for Canadian consumers and the general public.

SOURCE The Consumer Advocacy Group Of Canada

HUB International Names a Chief Sales Officer for Its Cannabis Insurance and Risk Services

Jay Virdi has been named Chief Sales Officer for HUB’s cannabis insurance and risk services in the U.S. and Canada.

PRESS RELEASE – HUB International (HUB) recently named Jay Virdi Chief Sales Officer for its cannabis insurance and risk services in the U.S. and Canada. Virdi most recently developed and managed the cannabis practice group for a North American specialty risks MGA. He has become a reputable leader in the advocacy for risk management and innovative insurance solutions in cannabis for clients, brokers and insurance providers.

As Chief Sales Officer, Virdi will focus on further developing and perpetuating deep expertise and resources across the U.S. and Canada, to provide medical and recreational cannabis producers, distributors and retailers proper protection and specialized solutions to reduce risks in all aspects of their operations.

Virdi has more than 15 years of experience in the insurance industry providing support for sales activities and operations, including the execution of strategic initiatives. He has experience advising on commercial lines insurance solutions and underwriting complex risks and commercial programs. Additionally, Virdi was a global sales consultant where he advised insurance carriers using big data analytics. His insightful recommendations resulted in the creation of innovative new products, identifying areas of opportunity for revenue generation and establishing meaningful key stakeholder engagement.

Virdi is a Chartered Insurance Professional (CIP) from the Insurance Institute of Canada. He holds an Honors Bachelors of Arts (Hon. BA) degree in Economics and Business Management from the University of Toronto and a Digital Certification in Communications, Culture and Information Technology (CCIT) from Sheridan College.

Canada unexpectedly loses 1,800 jobs, widely missing forecasts

Canada’s economy lost 1,800 jobs in October, widely missing economists’ expectations of a 15,000 gain.

Kelsey Johnson | Reuters

OTTAWA — The Canadian job market stagnated unexpectedly in October, losing 1,800 net positions, while the unemployment rate remained at 5.5 per cent, Statistics Canada said on Friday, as employment declined in the manufacturing and construction sectors.

Analysts in a Reuters poll had forecast a gain of 15,900 jobs in October and an unemployment rate of 5.5 per cent. Wages for permanent employees rose by 4.4 per cent, Statscan said.

Canada lost 16,100 full-time positions last month, but gained 14,300 part-time jobs. The number of self-employed workers in October fell by 27,800.

The Canadian dollar weakened to a three-week low of $1.3232 to the U.S. dollar, or 75.57 cents U.S., after the jobs data was released.

“It definitely runs against the grain of very strong job gains we’ve seen through most of the past year,” said Doug Porter, chief economist at BMO Capital Markets, noting there was likely a “small, temporary boost” because of hiring tied to last month’s national election.

“We have to be cautious about reading too much into any one report, but it shows that the economy is not simply on a one-way trip north here,” Porter said.

Canada’s central bank, which has not moved since October 2018 even as its counterparts – including the U.S. Federal Reserve – have eased, held firm as expected last week, but left the door open to a possible future cut to help the economy weather the damaging effects of global trade conflicts. The Bank of Canada said it would monitor “the extent to which the global slowdown spreads beyond manufacturing and investment” going forward while watching domestic data.

“I don’t think one number will move the needle a whole lot at the Bank of Canada, but at the margin it’s a little bit more of a cautious signal,” Derek Holt, vice president of capital markets economics at Scotiabank, said of the jobs report.

Statscan said the services sector gained 39,000 jobs in October, with increases reported in public administration, as well as finance, real estate, insurance and rental leasing industries, while the goods-producing sectors saw a decline of 40,900 jobs on losses in manufacturing and construction.

The country’s manufacturing sector lost 23,100 jobs in October, mostly located in Ontario, while the construction sector lost 21,300 positions across five provinces, Statscan said.
In a separate release, Statistics Canada said the value of Canadian building permits dropped by a larger-than-expected 6.5 per cent in September to $8.3 billion because of declines in the residential sector.

Source: Financial Post

Cannabis exclusion in home insurance policies may not be effective when tenants’ grow-op causes loss

By
Source: Dentons

Despite the efforts of insurers to exclude coverage in habitational insurance policies for losses caused by cannabis cultivation or production, a recent Alberta case serves as a reminder that coverage may, nevertheless, apply where an insured’s tenant’s grow-op causes a loss.[1] This is due to the existence of so-called “innocent insured” provisions in the Insurance Acts of Alberta, British Columbia and Manitoba.

Background

Home insurance policies have traditionally excluded coverage for losses caused by illegal activities. Many have also specifically excluded coverage for losses arising from illegal drug activity. With the Cannabis Act having come into force on October 17, 2018, Canadians may now legally cultivate up to four cannabis plants at a time in their dwelling-house.[2] As such, some insurers have amended their policies to exclude losses caused by growing cannabis, regardless of its legality.

However, insurers in Alberta, British Columbia and Manitoba may still be at risk of cannabis-caused losses even with broad exclusions on the growing or production of cannabis in a dwelling.

The innocent insured provisions

The innocent insured provisions protect insureds who are not responsible for or complicit in intentional acts that cause damage. Specifically, exclusions barring coverage for losses caused by a criminal or intentional act or omission are of no effect vis- à-vis an insured person who does not:

  1. Cause the loss;
  2. Abet or collude in causing the loss; and
  3. Consent to the act or omission while knowing—or having ought to have known—that the act or omission would cause the loss.

The innocent insured provisions of the three provinces are all identical.[3] British Columbia, Alberta and Manitoba brought their provisions into force in 2011, 2012 and 2014, respectively. Their enactment was a response to the Supreme Court of Canada’s (SCC) decision in Scott v. Wawanesa Mutual Insurance Co. [Scott].[4] In Scott, the majority of the SCC held that, upon the insured plaintiff’s son intentionally setting fire to the plaintiff’s house, coverage was not available to the plaintiff, as the policy excluded coverage for loss caused by a criminal or wilful act of the insured.[5]

Recent cases

While the innocent insured provisions have received relatively little judicial consideration, the recent 2019 Alberta case of Lafferty v. Co-Operators General Insurance Co. [Lafferty] should serve as a reminder that an insurer in Alberta, British Columbia or Manitoba could be on the hook for damage caused by a tenant’s grow-up, notwithstanding a cannabis exclusion.[6]

In Lafferty, the insured plaintiffs owned a house in which their tenants were growing cannabis. The insureds had no knowledge of this. The grow-op caused damage to the house. After the insurer denied coverage based on an illegal drug operations exclusion, the insured sued for coverage. Ultimately, the Court held the innocent insured provision to be unavailable to these insureds, as the loss occurred in 2010, while the provision came into force in Alberta on July 1, 2012.[7]

Nevertheless, the Court in Lafferty commented that the innocent insured provision could have prevented the insurer from relying on the drug operations exclusion had the loss occurred after the provision came into force.[8]

One may contrast the Court’s comments in Lafferty with a recent decision out of Saskatchewan, a province that does not have an innocent insured provision in its provincial Insurance Act. In the 2018 case of Carteri v. Saskatchewan Mutual Insurance Co., the Court dismissed the insured plaintiffs’ claim for coverage after an explosion and fire severely damage their rental property.[9] The explosion and fire evidently resulted from the tenants’ attempt to produce cannabis resin.[10] The insurance policy contained an exclusion denying coverage for loss caused by the manufacturing of illicit drugs.[11] The exclusion functioned to bar coverage, even though the insured property owners were arguably “innocent of any wrongdoing.”[12]

Rental properties are at a much higher risk

The innocent insured provisions afford protection to property owners when a tenant’s act or omission causes a loss, provided the insured is a natural person (as opposed to a corporation), and does not consent to or collude in such activity. This may prove problematic for insurers writing habitational policies in Alberta, British Columbia and Manitoba.

As rental properties already represent a higher risk exposure, insurers will want to underwrite such policies carefully, especially considering the increased likelihood of tenants seeking to grow marijuana plants in their dwellings legally, regardless of whether the property owner forbids it. Given that cannabis exclusions may not protect insurers in this situation, it is even more prudent that insurers require their insureds to conduct regular, periodic inspections of rental dwellings, in an effort to sniff out any cannabis production before it causes a loss.

For more information, please contact Robert Gilroy or another member of Dentons’ Insurance group.


[1] See Lafferty v Co-Operators General Insurance Co., 2019 ABQB 515, discussed below.

[2] Cannabis Act, SC 2018, c 16, s. 12(4)(b).

[3] See Insurance Act, RSA 2000, c I-3, s. 541; Insurance Act, SBC 2012, c 1, s. 35; The Insurance Act, CCSM c I40, s. 136.5(1).

[4] [1989] 1 SCR 1445.

[5] The SCC held the son to be an insured under the policy.

[6] 2019 ABQB 515.

[7] At para 20.

[8] At paras 19, 20.

[9] 2018 SKQB 150.

[10] At para 1.

[11] At para 2.

[12] At para 95.

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