The provincial court considered the issue of whether the Insurer was entitled to rely on an exclusion clause in a policy which excluded coverage for damage caused by vandalism while the dwelling was under construction or vacant. The provincial court held that the exclusion did not apply and gave judgment to the Plaintiffs.

4081471 Canada Inc. v. Dadswell Forster Insurance Services Ltd., [2005] A.J. No. 298, Alberta Provincial Court

The Plaintiffs claimed against the Insurer for fire damage to a residential dwelling. The cause of the fire was vandalism. The Plaintiffs purchased the insurance policy on the date of possession of the premises. The Plaintiffs received a copy of the dwelling policy prior to the fire, but did not receive the policy booklet until after the fire occurred. From the date of possession of the dwelling to the date of the fire, the Plaintiffs and other workmen were in the house daily, cleaning, renovating and readying the premises for occupancy by tenants. The court found that the Plaintiffs legitimately believed that they had, and were entitled to, coverage as set out in the dwelling policy and that the Insurer was therefore not entitled to deny coverage on the basis of the exclusions set out in the policy booklet.

The court then went on to consider the exclusions relied upon by the Defendant Insurer, in the event that it had erred in the foregoing analysis. The court referred to previous decisions which considered the definition of “vacant” in the context of exclusion clauses. The court found that the Plaintiffs clearly occupied and maintained control over the premises on a daily basis from the date of purchase of the insurance through to the date of the fire. The court noted that the Insurer’s risk had not in any way increased from what it would have been had the Plaintiffs or their tenants been resident in the dwelling. The court was satisfied that the property was not vacant and that the Plaintiffs were entitled to recover the damages they had incurred.

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