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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Decorating your yard before Halloween

Excerpted article was Written by Stephanie Fereiro | Economical

Halloween is just around the corner. Whether you’re going for a simple setup of cobwebs and cornstalks or building a haunted graveyard on your front lawn, taking a little extra care while you do it will not only help your decorations stay put, but it could also help you prevent a liability claim (which could come up if one of your visitors tripped on a topsy-turvy tombstone, for example). Consider these tips as you prepare your property for All Hallows’ Eve.

Decorating your yard before Halloween

  • Beware of tripping hazards. Keep in mind that many of your trick-or-treaters will likely be wearing masks, which could limit their visibility and make it tougher for them to make their way to your front door. Make sure your decorations and any electrical cords are placed away from your main walkways and stairs to prevent trips, and check that your steps and railings are in good repair.
  • Secure your skeletons. When hanging or placing decorations outside your home, secure them carefully so they don’t blow away or come loose and fall onto your walkways. This includes decorations that are placed on your lawn and your porch (like foam tombstones or scarecrows, for example).
  • Follow the directions. If any of your decorations came with instructions, be sure to read them carefully — and follow them. (E.g., string lights may say they’re intended for indoor use only. If that’s the case, only use them indoors, as using them outdoors may be dangerous.)
  • Go for fog. If you’re looking to create a spooky, foggy atmosphere, consider using a fog machine instead of dry ice, as dry ice can cause burns when touched. If you must use dry ice, be sure to keep it out of reach of visitors.

Last-minute to-dos for Halloween night

  • Light it up. If you’re planning on handing out treats, leave your outdoor lights on (and be sure to replace any burnt-out bulbs) so trick-or-treaters know you’re home and can see a clear path as they make their way to your door.
  • Don’t play with fire. Consider using no-flame battery operated candles to light up your jack-o’-lanterns. If you’d prefer to use real candles, place them in an area that will be out of reach for children and dogs, keep them away from wooden surfaces and flammable decorations, and don’t leave them unattended. If you’re using any string lights or decorations that require electricity, inspect the wires ahead of time to ensure they’re in good condition and don’t overload your circuits, as this could lead to a fire.
  • Keep your pets contained. Make sure your cats and dogs are in a secure area where they won’t be able to sneak out when you open the door for trick-or-treaters. Not only could your pet scare those little goblins, but he could also get spooked by all those costumes and run off — or into a busy street.

These are just a few ways to prepare for a safe and spook-tacular Halloween. Once you’ve decorated your yard, remember to design safe costumes for the kiddos and map out a route for your trick-or-treating trekif you’re planning on heading out for the night.

How to prepare your yard for a safe and spooky Halloween

ICBC urges caution as pedestrian injuries nearly double

ICBC urges caution as pedestrian injuries nearly double

Almost double the number of pedestrians are injured in crashes from October to January as the weather changes and daylight hours decrease.*

That’s why today, ICBC is launching a pedestrian safety campaign with police and TransLink to urge pedestrians and drivers to stay safe as crashes with pedestrians spike at this time of year.

Pedestrian safety is a serious concern in B.C. – they’re the most vulnerable road user to be injured when a crash occurs. Drivers should take extra time to look for pedestrians before turning especially near transit stops, avoid distractions and be ready to yield.

Pedestrians can help stay safe by making eye contact, watching for drivers turning left or right at intersections, and using designated crosswalks.

ICBC, TransLink and community policing volunteers will be handing out reflectors and safety tips in high pedestrian traffic areas across the province to help pedestrians stay visible.

This year’s campaign features online advertising that reminds drivers: you see pedestrians when you really look for them.

Learn more with ICBC’s infographic and tips.

Quotes:

Chief Constable Neil Dubord, Chair of the B.C. Association of Chiefs of Police Traffic Safety Committee

“This is the time of year when police see an increasing number of crashes involving pedestrians. We all have a part to play to make our streets safer. Drivers should know that distracted driving and failing to stop for people walking at intersections are some of the top factors in crashes with pedestrians. Pedestrians also need to be careful and aware. We encourage them to take out their headphones and take a break from the phone when crossing the road. Reflective gear, particularly on anything moving such as arms and legs, helps pedestrians be far more visible to drivers.”

Derek Stewart, TransLink Director of Safety and Emergency Management

“Everyone needs to be on the lookout for pedestrians, especially at this time of year when daylight hours are decreasing and weather conditions are changing. Pedestrians should never assume that they can be seen, even when using a crosswalk. Step out onto the street only when there’s certainty that it’s safe to do so. It’s vital that we all work together to avoid accidents or injuries involving pedestrians.”

Lindsay Matthews, ICBC’s Vice-President of Public Affairs and Driver Licensing

“Even when drivers proceed with caution, it’s hard to see pedestrians at this time of year when visibility is poor. Crashes with pedestrians are highest between 3pm and 6pm every day, when most of us are commuting home from school and work. Please focus on the road and leave your phone alone. It’s time we all do our part to create a safer driving culture in B.C.”

Regional statistics**:

  • In the Lower Mainland every year, on average, 2,300 crashes involve a pedestrian.

  • On Vancouver Island every year, on average, 390 crashes involve a pedestrian.

  • In the Southern Interior every year, on average, 280 crashes involve a pedestrian.

  • In the North Central region every year, on average, 87 crashes involve a pedestrian.


Editor’s note:
Pedestrian involved crash statistics for B.C. communities are available upon request.

*In B.C., 1,200 pedestrians are injured in crashes between October and January and 670 pedestrians are injured between May and August. ICBC data based on five year average from 2014 to 2018.

**ICBC data based on five-year average from 2014 to 2018.

“Hold on” for today’s Great BC ShakeOut – Nearly 1 million registered!

VANCOUVER, Oct. 17, 2019 /CNW/ – Join almost a million British Columbians as they “Drop, Cover and Hold On” during today’s 2019 Great British Columbia (BC) ShakeOut. The BC Earthquake Alliance and Insurance Bureau of Canada (IBC) are working together to present Canada’s largest earthquake drill on Thursday, October 17, at 10:17 a.m. Registration is already at a record high, and last-minute registrations may push the number over 1 million registrants.

Register today and encourage your family, friends and colleagues to do the same at www.ShakeOutBC.ca.

The Hon. Mike Farnworth, Minister of Public Safety and Solicitor General for BC, will be part of a media launch for the event today at Irvine Elementary School in Port Coquitlam. He said, “If you live in an active earthquake zone, knowing what to do when the shaking starts could save your life. ShakeOut is an important annual reminder to drop, cover and hold on, and I encourage all British Columbians to take the time to participate.”

Most of coastal BC is at high risk for an earthquake. There is a one-in-three chance that a significant earthquake will strike southwestern BC in the next 50 years. Participating in an emergency drill like ShakeOut, along with having an emergency kit and plan, is key to preparing ourselves and our families for earthquakes.

“Earthquakes don’t make appointments. We have to be ready when they arrive. Practising ‘Drop, Cover and Hold On’ builds muscle memory and is a great way to be prepared to survive and recover quickly,” stated Naomi Yamamoto, President of the BC Earthquake Alliance.

ShakeOut BC has been holding events since 2011, yet many people in the province still don’t know what to do in the event of an earthquake. To help better educate British Columbians, ShakeOut BC has created a series of informational videos that are available to share on YouTube, Facebook, Twitter and Instagram, and can be found using the hashtag #DontBeLeftOut.

“Everyone should be prepared to take immediate action once the shaking starts. By working together, we can make British Columbians safer and better prepared to cope when disaster strikes,” added Aaron Sutherland, Vice-President, Pacific, IBC.

Note to Editors:
If you work for a TV or radio station that will be airing the Great BC ShakeOut drill, celebrate your station’s commitment to earthquake preparedness by listing its name on the ShakeOut BC website. Just fill out this form.

About ShakeOut BC
ShakeOut BC earthquake drills help people at home, school and work practise how to be safe during an earthquake and provide an opportunity for everyone to improve their overall preparedness. By participating, you, your family, your co-workers and millions of others will be better prepared to survive and recover quickly following an earthquake. As of today, 65.6 million people worldwide are registered to participate in the October 17 drill, including more than 970,000 British Columbians currently registered to participate. Last year nearly 910,000 British Columbians participated.

About Insurance Bureau of Canada
Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up 90% of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.

If you require more information, spokespeople from IBC and the Great BC ShakeOut are available to discuss the details in this media release.

SOURCE Insurance Bureau of Canada

www.ibc.ca

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