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

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.


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.

It’s a new version of a scam that has ripped off thousands of individuals

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Insurer cancels homeowner’s policy 1 month after tornado

It was Greenboro resident Kate Hurman’s 2nd claim in 4 years

CBC News

Kate Hurman was frustrated and confused when her insurance company cancelled her policy a month after last year’s tornadoes damaged her property in the city’s Greenboro neighbourhood — all because she’d filed a separate claim within the past four years.

Hurman’s home was one of many in the region to suffer damage when a series of tornadoes ripped through several residential areas in September 2018.

“It took out my fences, it took out my deck, my gazebo, my furniture. It spun my barbecue around and smashed it down into my deck,” Hurman told CBC Radio’s All In A Day Monday. “Then it bounced over my house and took out my neighbours’ roofs.”

So Hurman turned to Johnson Insurance, the same company that had helped her several months earlier when a smaller wind storm resulted in minor damage to her property and her neighbour’s.

After a series of delays and missteps, Hurman eventually received $20,000 to repair her property and replace damaged items.

But then the insurance company, which Hurman had used for 19 years without ever making a claim, decided not to renew her policy.

‘I was shocked’

Hurman said she first received the news in a cryptic email. She followed up with a phone call, only to discover her policy was being cancelled.

Hurman said the company told her it was because she had filed two claims in a 48-month period — even though both claims were for weather-related events out her control.

“I was shocked. I mean, honestly, I was just shocked.”

Hurman said the 48-month window wasn’t mentioned anywhere in her policy.

“It’s not on their website. It’s nowhere that I could locate it,” she said.

CBC Radio reached out to RSA Canada, an umbrella group that includes Johnson Insurance, for comment.

Due to privacy regulations, we’re not able to comment on specific claims or customer insurance policies. Johnson’s complaint liaison office is available to any consumer who wishes to discuss specific policy discussions,” the company said in a statement.

But when Hurman started searching for a new company, she said it became clear the rule wasn’t an industry standard.

“I asked them outright: Do you have such a policy? And some companies … were hesitant. The company I went with said, ‘No, we don’t have that policy.'”

‘Upfront and clear’

Hurman is now calling for insurance companies to be “upfront and clear” about their policies.

“I wonder how many people in the Ottawa area understand that if you make two claims with some companies within a 48-month period, you will no longer have insurance with that company,” she said.

The affair has been a particular sore point for Hurman, who initially recommended her insurance company to her neighbours in the aftermath of the tornado.

“Here I was on the street writing on little Post-it notes to my neighbours, ‘Hey, my insurance company is great.'”

Her advice to others who could get stuck in a similar situation is simple: “Go ask them directly. They cannot lie but … they will not, up front, give you this information. And to me, it’s pretty vital information.”



Life, critical illness and disability insurance isn’t just for individuals and families. It can help protect your business, too.

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Improving Catastrophic Changes For The Most Vulnerable Victim Community

Article by Charles E. Gluckstein and Jessica Golosky

The automobile insurance system in Ontario has undergone a series of changes within the past few decades as a result of various efforts by different governments. Each reform has brought a temporary drop in the cost of auto insurance, however, none have been effective in the long run. The Ford Government is working on a plan to reduce the cost of auto insurance for the public and to make the claims process more affordable and accessible for Ontario drivers.

The Ministry of Finance consulted the public on this issue between January 8 and February 15, 2019. The results of the online survey showed:

  • 60% of respondents say that shopping for and buying auto insurance is difficult and frustrating;
  • 55% said that it is too hard to tailor their policy to their needs;
  • 54% said that insurance policies are complicated and difficult to understand; and
  • 53% said it takes too long to receive benefits after being injured in an accident.1

The proposed reforms are intended to provide drivers with options for a range of different auto insurance coverage choices available to them at different premiums. Further, the government is seeking to increase competition in the auto insurance market and to make it easier for drivers to shop for insurance. Under this new regime, auto insurance should become more affordable.

One important aspect of the Ford Government’s plan for reform is the Driver Care Plan, which is meant to revamp the claims process for individuals who are injured in a car accident by increasing and improving access to treatment and care for injured claimants. The Plan will include a return to a default benefit limit of $2 million for catastrophic injuries, with an option for drivers to reduce their catastrophic coverage below the default limit to a minimum of $1 million.

Under the previous system prior to 2016, the default benefit limit for those who are found to be catastrophically injured was $2 million, which included $1 million for medical/rehabilitation benefits and $1 million for attendant care. This was reduced to a combined limit of $1 million in 2016.

With the 2016 changes in the auto industry came a tightening of the definition of catastrophic impairment under the Statutory Accident Benefits Schedule, O. Reg 34/10. It is unclear as to whether the change to the $2 million system will be accompanied by a change in the definition of catastrophic impairment.

It is also unclear as to how the $2 million benefit will be broken down, for example, whether it includes both attendant care and medical/rehabilitation benefits, or whether it will be broken down into $1 million for each benefit. According to the Consultation Paper that was put out by the Ontario Government, the proposal does not split the $2 million benefits into sub-limits, allowing claimants the flexibility to access the type of care needed in the way that works best for them.2

The change back to a $2 million system represents a significant improvement for those who have been seriously injured in car accidents by increasing the funding that these claimants have access to. The Ford Government expects that implementing this change will lead to:3

  • Increased coverage for Ontarians to ensure that accident victims can obtain the care and treatment they need more quickly;
  • The ability for drivers to customize and choose their insurance coverage; and
  • Flexibility for catastrophic claimants to choose how they use their benefit limits (for medical, rehabilitation and attendant care) to suit their individual needs.

The Ontario Government is, once again, consulted the public on the Driver Care Plan reform, particularly on this issue of the catastrophic impairment default benefit limit.4 Written submissions were be accepted up until September 17, 2019. Further information can be found on the website for the Ontario Government’s Proposal for Consultation on this issue:

Charles will be meeting with MPP Cho in October, 2019 to advocate for auto insurance reform. At Gluckstein Lawyers, our goal is to make a positive difference in our clients’ lives. Whether it’s driving change to outdated laws and regulations, or offering a shoulder during a moment of need. For former President of OTLA, Charles Gluckstein, the business of advocating for people has proven to be an invaluable skill.


“Unconstitutional” ICBC Expert Witness Rule Struck Down By BC Supreme Court

Source: Erik Magraken BC Injury and ICBC Claims Blog

Earlier this year BC’s Attorney General surprised the legal community with changes to the BC Supreme Court Rules limiting the number of expert reports in motor vehicle injury prosecutions.  The rule changes were brought without notice to the profession, were retroactive and were drafted to save a primary litigant, ICBC, money at the cost of the substantive rights of individuals before the judiciary.

In April a legal challenge was launched arguing these changes were unconstitutional.

Today the Chief Justice of the BC Supreme Court ruled on challenge and declared that these changes were “of no force and effect” due to their unconstitutional nature.

Mr. Justice Hinkson provided the following reasons finding these changes were out of line:

[120]     I find that the effect of the impugned Rule is to change the substantive law of evidence that has guided this Court from its inception, and I find that this is not one of the exceptional cases referred to by Justice Lambert where the Rules may create new substantive law. Accordingly, I find that the Rule 11-8 Orders (and with it, the impugned Rule) are not authorized by the Act…

[164]     The impugned Rule does more than limit the court’s discretion; it eliminates it, and that is the petitioners’ complaint.

[165]     The arbitrary limit of three expert witnesses to address damages, unless there is agreement to more by the parties or expert witnesses are chosen by the court could result in the very unfairness discussed by McLachlin J. in Porto Seguro…

[172]     …the impugned Rule places the court in a role that it should not be placed in. Transferring the responsibility of ensuring that there is relevant evidence upon which to decide the issues in a personal injury case from the parties to the court does, in my view, intrude upon what has, to date, been the core function of the court: to decide a case fairly upon the evidence adduced by the parties…

[185]     Considering the totality of the submissions and the evidence before me, I find that the impugned Rule compromises and dilutes the role of the court, and encroaches upon a core area of the court’s jurisdiction to control its process…

[197]     The petition is allowed in part.

[198]     I declare that the Rule 11-8 Orders are, in part, contrary to s. 96 of the Constitution Act, 1867, and thus unconstitutional and of no force or effect. In the result, sub Rules 11-8 (3), (4), and (5) are set aside. In the result sub Rules 11-8(10) and (11) must also be set aside.

Reading between the lines of the judgment the Court suggests that a ‘soft’ expert witness cap may be possible provided the Court retains real discretion to allow parties to marshall all the evidence necessary to prove their case.   Such a rule could likely be crafted and receive the support of various stakeholders who access the Courts in such claims.

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