COVID-19 And The Vacancy Exclusion In Homeowner Insurance Policies

COVID-19 And The Vacancy Exclusion In Homeowner Insurance Policies

The excerpted article was written by Meera Jain, Raman Johal and Samantha Ip

Clark Wilson LLP

The COVID-19 global pandemic poses an unprecedented risk to public health and safety and has already had a tremendous impact on our economy, forcing businesses to close, projects to shut down, and creating new liability exposures. Consequently, businesses and insurers have many questions regarding policy wording and insurance coverage relating to COVID-19. Will a commercial policy respond to cover business interruption losses? Will a builders’ risk policy respond to inevitable losses from project closure and delay? Will an employment practices liability policy cover potential lawsuits commenced by an employee alleging negligence for exposing the employee to COVID-19? Will a directors and officers policy respond to potential claims against senior management by shareholders or investors arising from corporate decisions made in response to COVID-19?

To answer these questions, the Clark Wilson Insurance Group is presenting a series of articles through its COVID-19 INSURANCE SERIES. In this article, we address whether the “unoccupied exclusion” contained in most homeowner insurance policies will be triggered if a homeowner is caught somewhere due to travel restrictions or other circumstances and his or her home ends up being unoccupied for more than thirty days.

Will the Vacancy Exclusion Operate to Exclude Coverage in the Context of COVID-19?

The COVID-19 global pandemic has resulted in serious restrictions on how we go about our day-to-day lives has led homeowners and insurers to raise questions about policy wording and insurance coverage related to COVID-19. What if a homeowner is unable to travel home from Peru or must have treatment in hospital due to COVID-19, resulting in an unoccupied home for more than 30 days?

The Unoccupied/Vacancy Exclusion

An insurer is entitled to know how a premise is being used. A vacant or unoccupied home presents a different risk than one that is being occupied. To put it simply, if a home is not occupied, there is higher risk that property damage can occur from an insured peril such as fire, flood of theft. As such homeowner policies will contain what has been coined as the “vacancy exclusion” to allow an insurer to deny a claim if the claim occurred during more than a certain number of days of vacancy.

Most homeowner policies will differentiate between a vacant and an unoccupied home. A vacant home is one where the dwelling is not furnished for normal habitation or the occupants have moved out with no intention to return. An unoccupied home is one that has not been lived in for thirty consecutive days. Most insurers will require that a homeowner notify them if the home is being unoccupied or vacant to allow the insurer to amend the terms and condition of the insurance policy if necessary. A failure to comply with this notice condition may result in an insurer denying coverage for a claim or voiding the policy altogether.

The COVID-19 travel restrictions and, in some countries, travel bans, may have made it difficult or impossible for homeowners to return to their homes. Worse yet, a homeowner may have to undergo treatment in hospital for more than 30 days, leaving a home unoccupied. A homeowner is required to notify its insurer if they are unable to return to their home after being away for more than thirty days, or if they may be in treatment for that amount of time, even if that absence was the result of a COVID-19 factors. A failure to notify their insurer may result in the insurer denying coverage for a claim that occurs during their absence.

Failure to Report an Unoccupied Home is Not a Material Change in Risk

Statutory Condition #4 of the Insurance Act requires that insureds report any material change in risk to their insurer, failing which an insurer can void the policy ab initio (as if it never existed). The statutory condition is in all homeowner policies. Consideration of the occupancy exclusion is separate from a consideration of material change in risk which would allow underwriters to void a policy ab initio. Change in the state of occupancy is likely a material change in risk but requires knowledge and control on the part of the insured, such as renting the home to tenants when it was stated to be occupied by the homeowner. However, failing to report that a home is unoccupied during the 30-day period has been deemed not to be a breach of the requirement to report a material change in risk.

Unjust Contract Provision May Prevent Insurers from Relying on Vacancy Exclusion

Section 32 of the Insurance Act contains an unjust contract provision which would likely prohibit an insurer from excluding coverage or voiding a policy ab initio if the underlying reason for triggering the unoccupied exclusion or the statutory condition related to material change in risk were caused by COVID-19. Section 32 provides that:

  1. if a contract contains any term or condition… that is or may be material to the risk, including, but not restricted to, a provision in respect of the use, condition, location or maintenance of the insured property, the term or condition is not binding on the insured if it is held to be unjust or unreasonable by the court before which a question relating to it is tried.

If a homeowner is forced to go to court to enforce coverage against an insurer that has denied coverage due to the occupancy exclusion, the homeowner may rely on s. 32 to argue that it would be unjust or unreasonable for the insurer to enforce the occupancy condition given the COVID-19 travel restrictions. The application of s. 32 has not been tested in the context of a global pandemic such as COVID-19 but we expect that a court will afford a homeowner some leniency in failing to comply with the strict notice requirements under a policy if they are prevented from returning to their home due to the COVID-19 travel bans. With that said, homeowners should take precautions when leaving their home unoccupied for an extended period of time to avoid a potential loss, such as asking a friend or neighbor to visit the home every few days.

Our Recommendation

We do not recommend that insurers make any blanket policy changes or broad communications about the enforcement of the “unoccupied exclusion”. Rather, each claim should be considered on its own as coverage depends on the circumstances of each case and the specific policy wording. Any blanket policy change or broad communication may have the unintended consequence of estopping insurers from relying on the vacancy exclusion as it can be regarded as having waived its right to do so.

Commercial insurance policies may also contain similarly worded vacancy exclusion clauses. The above analysis would equally apply to any species of policy containing similar clauses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq

Zipcar to close operations and drive out of British Columbia on May 1

VANCOUVER _ Car-sharing service Zipcar says it will stop operations on May 1 in British Columbia.

In an email notice to its customers, the Boston-based company says the “complexities” of operating in the province, including local insurance regulations, are behind its decision.

The company could not immediately be reached for comment.

In the notice, Zipcar says customers can still use their memberships in other locations and it will continue operating in cities across North America.

Zipcar, which is owned by car rental company Avis Budget Group Inc., came to B.C. in 2007.

Share Now, formerly Car2Go, closed up shop in North America earlier this year.

Insurance companies cut group health plan premiums as claims fall

By Tara Deschamps


TORONTO _ Canadian insurance companies are slashing premiums in a bid to help small- and medium-sized businesses grappling with COVID-19.

The declining use of dental benefits and some extended health care benefits have pushed the Winnipeg-based insurer Canada Life Assurance Co. to offer premium reduction adjustments for employer-sponsored group benefits plans.

Canada Life President Jeff Macoun said the reductions will be 50 per cent for dental and 20 per cent for vision and extended health care benefits, excluding prescription drugs.

“Unlike premium deferrals, these savings do not need to be repaid later, and reflect that some healthcare service providers have shifted to virtual treatment, while others are offering more limited services,” he said in a statement.

Canada Life said prescription drugs are not included as the services are essential and the number of claims have not dropped.

The company said the premium reductions will be retroactive to April 1 with credits applied to May invoices.

“Over 1 million Canadians were laid off in March alone, and financial insecurity is growing,” he said.

“These premium reductions will give more than 26,000 of our business customers some much-needed financial relief, both to their business and to maintaining valued coverage for their employees.”

Over at Sun Life Financial Inc., credits against dental and non-drug-related extended health care premiums will be offered in hopes of reducing invoices for Canadian businesses, who are already struggling with low cash flow.

The insurance company will offer 50 per cent credit per month against paid dental premiums because most routine dental visits have stopped during the pandemic.

For non-drug-related, extended health care premiums it will offer a 20 per cent credit on each of a client’s extended health care benefits.

“Prescription drug usage has not declined during the pandemic,” said Dave Jones, the senior vice-president of group benefits at Sun Life Canada, in a statement.

“Plan members are using an increased volume of virtual care across their paramedical providers, however usage has still reduced.”

April credit in both areas will be applied to June invoices and Sun Life will continue to assess the offerings on a monthly basis.

Meanwhile, Manulife Financial Corp.’s said in an email to The Canadian Press that all group benefit plan sponsors, including small, medium and large-scale businesses, who have a fully-insured, non-refund benefits plan will be given premium relief.

Manulife will reduce their dental premiums by 50 per cent and their extended health care premium, including prescription drugs, by 10 per cent in the month of May.

Manulife said coverage for plan members will not change and the premium reductions will be applied to regular pre-authorized debit draws for May.


RSA Canada announces relief measures for Canadians in response to the COVID-19 crisis

“In the last month, Canadians have changed where they work, how much they drive and what they need to protect themselves, their families and their businesses,” says Martin Thompson, President and CEO, RSA Canada. “As a national insurer, our promise is to be there for our customers when they need us most, so we are implementing new measures to provide meaningful assistance during these uncertain times.”

Providing relief for those facing financial hardship
RSA Canada is providing several relief measures to assist Canadians who are impacted financially by COVID-19. Every customer’s situation and insurance needs are unique, so options are designed to provide enhanced flexibility and assistance. RSA Canada will also be implementing additional auto and property insurance premium relief measures moving forward, to support customers during the crisis.

The following measures will be in place until June 30, 2020 and will continue to be reviewed as the situation develops:

  • Reduced premiums for customers who are driving or commuting less or who are no longer using their vehicles if circumstances have changed due to the pandemic. Customers should contact their broker or insurance representative to make changes to their auto coverage.

  • Flexible payment options, payment deferrals and support for customers who are facing financial hardship as a result of the pandemic. Customers who have been impacted by the pandemic should contact their broker or insurance representative to discuss the available options.

  • Coverage for customers who are temporarily using their vehicle for delivery services – such as an employee of a pharmacy, restaurant, grocery store, or as part of an app-based food delivery service. This is available for all personal auto insurance policies and will not change the customer’s premium. Customers should contact their broker or insurance representative to confirm this coverage.

  •  NSF fees for personal and small commercial policies charged by RSA Canada occurring after April 1, 2020 will be waived. Some financial institutions may charge separate NSF fees and customers are encouraged to contact their local bank for more information.

  • As all Canadians are encouraged to ‘Stay at Home’, customers who are required by their employer to work from home due to the current situation with COVID-19 can rest assured that the coverage they already have in place will not be impacted.

To support its commercial insurance customers, RSA Canada is providing relief measures as well as guidance to help them mitigate any risks they face as a result of the pandemic. Commercial customers are encouraged to contact their broker to discuss options further.

  • For commercial insurance customers, RSA Canada is adjusting its rating approach to support business owners and the challenges many of them are facing.

  • For small and mid-sized businesses that have been directly impacted and are experiencing temporary closures and changes in operations, RSA Canada is working with its broker partners to be as flexible and accommodating as possible including allowing mid-term coverage adjustments, payment deferrals and premium adjustments.

  • For businesses that are making changes to their operations to support the current crisis, RSA Canada is providing flexible underwriting solutions.

  • RSA Canada is also providing guidance to help businesses that have shut down to protect their idle property and fleets.

Supporting the most vulnerable Canadians through Food Banks Canada
RSA Canada is donating $100,000 to Food Banks Canada to purchase food products for those who are living with food insecurities, especially during this challenging time. The company continues to match employee donations to community causes that they care about most, including local food banks, as part of its corporate responsibility program.

Currently, Canada’s supply chain is working in overdrive to keep up with the unprecedented demand for food and other goods due to the current pandemic. This has made it more difficult for food banks across the country to receive in-kind donations in the same quantity and frequency that they had before the pandemic.

Food Banks Canada is facing several challenges:

  • Drastic declines in the number of volunteers;
  • Significant surges in the number of clients accessing food through food banks;
  • Dwindling donations when compared to regular operations.

“Giving food to those in need can be difficult in the best of times and COVID-19 has made that task even harder,” says Chris Hatch, CEO, Food Banks Canada. “Food banks are experiencing high demand across the country as a growing number of Canadians suffer income loss. That’s why we’re grateful for the support of organizations, such as RSA Canada, which are helping provide nourishment to those who are most deeply affected by the pandemic.”

Canadians who are interested and in a position to support Food Banks Canada can make a donation at or contact their local food bank to determine which resources are needed most.

Customer-first commitment
As risk experts, RSA Canada’s employees have a role to play in helping customers manage the uncertainties and complexities of today’s world. RSA Canada continues to work with industry associations to identify and address common challenges and emerging issues that may impact customers, and to help them manage and get ahead of potential risks. All parts of the company are working hard to maintain strong service levels to ensure customers receive assistance when they need it most.

Customers are encouraged to leverage RSA Canada’s online claims submission tool which is available at (not available in Quebec).

About RSA Canada
The RSA Canada group of companies includes Roins Financial Services Limited, Royal & Sun Alliance Insurance Company of Canada, Quebec Assurance Company, Johnson Inc., Unifund Assurance Company, Western Assurance Company, Ascentus Insurance Ltd., Canadian Northern Shield Insurance Company and RSA Travel Insurance Inc. (collectively, “RSA Canada”) and is part of a group of companies headed by RSA Insurance Group plc. RSA Canada employs more than 2,800 people across Canada and is one of the oldest insurance companies in the country with roots dating back to 1833. For more information, visit

About Food Banks Canada
Food Banks Canada provides national leadership to relieve hunger today and prevent hunger tomorrow in collaboration with the food bank network from coast-to-coast-to-coast. For 40 years, food banks have been dedicated to helping Canadians living with food insecurity.  Over 3,000 food banks and community agencies come together to serve our most vulnerable neighbours who – last year – made 1.1 million visits to these organizations in one month alone, according to our HungerCount report.  Over the past 10 years, as a system we’ve sourced and shared over 1.4 billion pounds of food and Food Banks Canada shared nearly $70 million in funding to help maximize collective impact and strengthen local capacity – while advocating for reducing the need for food banks.  Our vision is clear: create a Canada where no one goes hungry. Visit to learn more.


Manulife helping those on the frontlines

Manulife has set up the St. Mary’s COVID-19 fund to help those on the frontlines, who are battling the virus.

Every dollar donated will be matched by Manulife, up to $200,000.

St. Mary’s General Hospital in Kitchener is the referral centre for specialized respiratory and thoracic disease in Waterloo Region.

The funds will be used to purchase critical equipment and supplies needed to fight the coronavirus.

You can also share a personal message for the frontline workers, which will be displayed in the hospital’s lobby.


Ontario allows auto insurance companies to provide rebates due to pandemic

By Allison Jones


TORONTO _ Ontario has made a regulatory change that will more easily allow auto insurance companies to provide breaks to their customers because of the COVID-19 pandemic.

The change will allow insurance companies to provide auto insurance premium rebates to consumers for up to 12 months after the emergency has ended.

Finance Minister Rod Phillips said he will be watching to see companies’ responses.

“Given the financial crisis that’s facing many Ontario families, I think with this barrier removed we should expect insurance companies to be responding in a matter of days,” Phillips said.

The regular prohibition on such rebates is in place to ensure consumers aren’t misled in purchasing insurance based on them, the government said.

Phillips said Ontario isn’t dictating a certain percentage of rebate for companies to provide, but he said it needs to be  “commensurate with the scale of duress that Ontario families are under.”

He said some companies have already done this, and the province wants to make it as easy as possible for drivers to receive discounts because so few people are driving right now.

Allstate Insurance Co. of Canada is giving all of its drivers a “stay at home payment” of about 25 per cent of their monthly auto premium.

CAA Insurance has said a 10 per cent reduction for a year for both new and existing customers, once they renew, will be automatically applied.

Intact Financial Corp. and Aviva Canada are offering discounts of 15 per cent for customers who are driving less and reductions of 75 per cent for customers who park and store their vehicles.

Most companies are also offering to defer payments for customers in financial difficulty and waive non-sufficient fund fees.

The NDP has called on the Ontario government to mandate a three-month, 50 per cent discount on auto insurance.

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