Protected at Home or Cottage this Summer… Are You Sure?

Written by Jonathan Burton, Senior Associate & Lawyer   When it comes to home insurance, the typical homeowner or cottage owner may think that the simple statement “there’s insurance on this place” is good enough.  These folks may naively think that there will be insurance coverage available whether the house burns down, is burglarized, and/or if someone is seriously injured on the property.  Unfortunately, it is not that simple.  Those whose careers are tied to the insurance industry know that there are complexities and layers to the question whether insurance coverage is indeed available in a variety of scenarios. Two recent cases, one from the Ontario Court of Appeal and the other from the Superior Court of Justice, highlight some of the nuances that exist in insurance policy language that can have devastating consequences for those seeking compensation for injury or those who believe that they are protected if sued for an injury or death on a particular property.  Both cases look closely at the meaning of the terms “household” and “while living in the same household” in the context of their unique fact patterns. In Ferro v. Weiner Estate[1], a decision released January 28, 2019 by the Court of Appeal, the issue was whether a home insurance policy on a cottage, issued to an elderly woman (Enid) now living in a nursing home, covered an adult child (Scott) who was a regular visitor to the cottage and who hosted guests at the cottage.  The question whether Scott was protected under Enid’s insurance policy came down to whether Scott was considered to be a member of the household. Tragic circumstances surrounded the Ferro v. Weiner case.  A young man drowned at the cottage his family sued both Scott and Enid (among others).  Enid’s home insurance covered the insured’s relatives while living in the same household as Enid.  At motion, the Judge ruled that Enid’s insurer, Intact, had a duty to indemnify Scott.  The decision was overturned on Appeal.  When reviewing Scott’s lifestyle at the time of the tragic incident, the Court determined that Scott’s connection to both the cottage and Enid, in terms of the living arrangement, was not such as to consider Scott to be “living in the same household” as Enid for purposes of Enid’s home insurance coverage. Therefore, the policy did not affort Enid’s son any protection in the circumstances. The significance of this decision is this: people who host guests at homes that are owned by others, including property owned by other family members, should be mindful of the implications for their own liability if guests are injured on these properties. Prudence would dictate that inquiries be made in advance by the host to determine whether the property’s insurance extends to the event itself and to those hosting it, and if not, whether event-based coverage is obtainable. In Traders General Insurance Company v. Gibson[2], the Court considered whether a mother (Elizabeth) was entitled to liability insurance coverage in a lawsuit brought against her by her daughter (Betty – age 64 at the time of the incident), who was living in the same household as her at the time of the incident.  The incident was a fall that occurred on the front porch of the home, where Betty was injured. In this case, the key determinant as to whether the insurer would cover Elizabeth for her alleged negligence, was the living arrangement between Elizabeth and Betty.  Elizabeth’s home insurance policy contained an exclusion: “We do not ensure claims made against you arising from: 5. Bodily injury to you or any person residing in your household other than a residence employee”.  The household exclusion is common in most home insurance policies. It is therefore well-known in the insurance world that persons living in the same household as the policy-holder will not have access to coverage in the event of the homeowner’s negligence resulting in injury to that person. The flip side is that the homeowner will not be protected against claims by persons residing in the same household, subject to whatever exceptions are set out in the policy and subject to whatever interpretations of the policy the Court may adopt. Through it’s analysis, the Court determined that while Betty could not be said to be a “residence employee”, she did meet the definition of “tenant”.  Because Betty had been paying a fixed rent to live in the home for 20 years prior to the fall, the Court interpreted the exclusion clause narrowly, and concluded that Betty was a tenant and that her claims against Elizabeth were covered under Elizabeth’s home insurance policy.  Part of the analysis focused on the intentions of policyholders such as Elizabeth at the time of purchasing insurance.   Takeaways from these two recent decisions: The Ferro case is a caution to those who are hosting guests at properties they do not own.  If your negligence causes an injury to a guest, do not expect the home insurer for the owner to cover you.  Make sure you have your own insurance coverage and, if in doubt, contact the home insurer for the property prior to hosting guests to discuss coverage and confirm if coverage exists in the given scenario.  Better safe than sorry! The Traders case reminds us to examine the relationships of those living in our households.  If anyone in our home is paying rent to live there, document the rent transactions and do your best to clearly define the tenancy relationship.  Even better, inform your insurer that you have a tenant and confirm coverage.  This will help protect you if the tenant is injured on your premises and sues you. Informing your home insurer of material (important) changes to your home and/or living situation, when the changes are made and prior to an incident occurring, can save you significant stress and help you avert financial disaster down the road.  The risk of a slight premium increase is far better than the risk of not being covered.   [1] [2019] O.J. No.386 [2] 2019 ONSC 1599