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b Changes Material to the Risk Section 549


Moxness v. Co-operative. insured had prior accident, ten driving ... operative ... Bordeniuk v. Co-Operative Fire (con't) insured did not renew or ... – PowerPoint PPT presentation

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Title: b Changes Material to the Risk Section 549

(b) Changes Material to the
Risk Section 5494
  • must be material to the risk
  • must be within control and knowledge of insured

Section 5494 (con't)
  • must be promptly notified in writing
  • insurer can cancel, charge extra premium
  • unearned premium must be returned

Nahayowski v. Pearl
  • property sold March 8, 1958 on terms
  • action for cancellation due to non-payment
    brought on Aug. 29, 1960
  • plaintiff (vendors) insured ppty on Feb 2 1962

Nahayowski v. Pearl (con't)
  • purchasers moved out on April 1962
  • ppty vacant until fire on Aug. 21, 1962
  • Is vacancy a change material to the risk?
  • Was vacancy within control and knowledge of the

Nahayowski v. Pearl (con't)
  • Was vacancy condition in policy breached?
  • Could section 552 assist insured with respect to
    a breach of the condition?

Watkins v. Portage La Prairie
  • bad tenant in plaintiffs house
  • tenant was told to leave by December 3
  • on Dec 4 plaintiff got owners insurance for a
    single-occupancy dwelling

Watkins v. Portage La Prairie (con't)
  • tenant didnt leave until second week in Jan.
  • things missing from the house
  • policy remained in force until termination and it
    was not renewed

Watkins v. Portage La Prairie (con't)
  • Was there a misrepresentation as to the nature of
    the house when policy was taken out?
  • Was the house out of coverage when it was tenant
    occupied but then back in coverage when tenant
    moved out and owner moved in?

Watkins v. Portage La Prairie (con't)
  • Was there a material change to the risk when
    tenant did not move out?
  • Was it under control and knowledge of insured?
  • Did the fact that insurer did not cancel the
    policy and did not return premiums affect its

Watkins v. Portage La Prairie (con't)
  • Was there a nondisclosure?
  • What did trial judge decide - failure to notify
    of change? non-disclosure

  • Can insurer cancel for misrepresentation and not
    return premiums?

Court of Appeal
  • parties agreed to limit case to material change
    in risk defence
  • not in knowledge and control that tenant was
    refusing to go
  • control means physical control

Court of Appeal (con't)
  • was knowledge and control required by common law?
  • did common law apply here?

Marche v. Halifax Insurance
  • insureds moved left house vacant
  • tenant moved in
  • at time of fire tenants possessions in house,
    although tenant may have left
  • no vacancy at time of loss

Marche v. Halifax Insurance (con't)
  • insurer claimed that prior vacancy was material
    change and voided policy
  • tj held that even if this was breach of stat
    cond., s. 552 allowed court to declare it unjust
    or unreasonable

Marche v. Halifax Insurance (con't)
  • SCC can s 552 relieve against unreasonable or
    unjust statutory conditions?
  • how can a statutory condition which is mandated
    by legislature be unreasonable? How did SCC solve
    this dilemma?

Marche v. Halifax Insurance (con't)
  • what were insurers arguments that sect was
    restricted to statutory conditions? - see p. 154
  • What did majority of SCC decide regarding whether
    the earlier vacancy could be relied upon by the
    insurer even if the loss occurred after the
    property became unvacant? See p. 156

Marche v. Halifax Insurance (con't)
  • Dissent
  • sect 552 does not apply to statutory conditions
  • dissent examined the immediate context of the
    words in s 552, the broader context of the
    section and the external context - see p. 157

Marche v. Halifax Insurance (con't)
  • look at the four words exclusion, stipulation,
    condition or warranty - only a condition can be
    a statutory condition, others are all
    contractual, therefore all must be contractual
  • look at broader context - see 158-161

Marche v. Halifax Insurance (con't)
  • why require mandatory statutory conditions and
    allow no deviation? Is it for insureds benefit
    or insurers benefit?
  • when Act refers to statutory conditions it refers
    to them as statutory conditions - not just

Marche v. Halifax Insurance (con't)
  • fact that no link between loss and material
    change irrelevant that is true of all breaches
  • insureds ignorance that it was material and had
    to be disclosed irrelevant

3. Automobile Insurance (A) Non-disclosure and
Misrepresentation Section 613 (1)
  • applicant gives false particulars
  • applicant knowingly misrepresents

  • applicant fails to disclose
  • insured contravenes term of contract
  • insured commits a fraud
  • insured wilfully makes false statement re claim

Section 614 1
  • change material to risk

Sleigh v. Stevenson
  • son bought car, registered it in mothers name,
    transferred license to mother before insurance
  • mother insured car - stated she bought it and was
    the registered owner (which she was)

Sleigh v. Stevenson (con't)
  • son told these things to agent when insurance was
    being obtained
  • agent put in incorrect answers mother signed
    without reading
  • wrong occupation of mother also put in

Sleigh v. Stevenson (con't)
  • son was driving, was in accident, indemnity
  • What arguments does insurer have to deny claim?
  • was statement that mother was registered owner

Sleigh v. Stevenson (con't)
  • what about statement that she purchased car?
  • if not is this knowing misrepresentation?

Sleigh v. Stevenson (con't)
  • how about the fact that mother did not put
    answers in, did not know what answers were, and
    signed without reading application?
  • how about lack of insurable interest?

Merritt v. Merit Insurance
  • Pls co owned 11 trucks
  • one of trucks damaged insurance coverage claimed
  • wrong year of truck given in application - 1956
    truck was described as a 1958 truck

Merritt v. Merit Insurance (con't)
  • wrong serial number as well
  • were these false descriptions to prejudice of

Moxness v. Co-operative
  • insured had prior accident, ten driving
    convictions, suspended license
  • spoke to agent over the phone
  • told agent about tickets in general terms, did
    not tell agent about license suspension, nor
    about one minor accident while car driven by
    someone else

Moxness v. Co-operative (con't)
  • application later signed without having been read
    over (in dispute)
  • agent assured him he would follow up on the
    driving record
  • driving record obtained after accident occurred

Moxness v. Co-operative (con't)
  • was this a knowing misrepresentation on part of
  • What is Newsholme rule?
  • Are there exceptions - eg. Blanchette case (p.
    168) or Stone (p. 168)?

(B) Changes Material to the Risk Thompson v.
  • Buck Peters (a rodeo guy) bought car with loan
    and granted lien
  • Thompson (pl) agreed to buy car from Buck,
    payment to be made in cows

Thompson v. Allianz (con't)
  • Thompson did not know about the lien
  • Insurance issued to Thompson - no disclosure of
    lien - 1989
  • Collision damage when Buck was driving - 1993

Thompson v. Allianz (con't)
  • Lots of people drove car, but ultimately Buck
    became main driver
  • Was there a change material to the risk? What was

Thompson v. Allianz (con't)
  • What was problematic about Bucks driving the
  • Must insured know that the change is material to
    risk? What must insured know?

Travellers Indemnity v. Lafleche
  • son bought a car using as part payment a car his
    father had given him
  • car registered in fathers name, father was

Travellers Indemnity v. Lafleche (con't)
  • son in accident
  • Did insured father have insurable interest? Was
    he the owner?

Travellers Indemnity v. Lafleche (con't)
  • Did material change in risk regarding first car
    (the one that was given) invalidate insurance on
    second car (the one bought by son), since the
    second car was paid for and driven by son? (ie.
    the circumstances surrounding the insureds
    ownership of second car was materially different
    than circumstances surrounding ownership of first

  • is physically altering a vehicle to turn it into
    mobile concession vehicle a material change?
  • is turning a pleasure vehicle into a business
    vehicle a material change?
  • why did court rule against insurer in this case?

  • some cases avoid material change in risk defence
    by seeing it as coverage issue, and not a breach
    issue. Thus if at time of accident, car was not
    being used as a business vehicle, there is still
    coverage. Author is critical of this.

4. Life Insurance (A) misrepresentation
  • s. 567 disclosure of material facts
  • s. 568 incontestability clause
  • s. 570 misstatement of age

Murphy v. Sun Life
  • insured lied or failed to disclose on 3 questions
  • died one year later from natural causes unrelated
    to misrepresentations
  • does IA require dishonest intent?

Murphy v. Sun Life (con't)
  • does insured have to realize that the
    misrepresentations are material?
  • who has onus of proof re misrep. and non-
  • does death have to relate to the misrepresented

(B) Incontestability clause Bureau v. Mfgers
  • policy issued June 1932
  • died Jan 1935
  • insurer claimed misrepresentations - 2 years had
    passed, therefore fraud required

Bureau v. Mfgers Life (con't)
  • if between application and delivery of policy
    there has been change in insurability is policy
    valid? See section 564(1)
  • Is fraud required under s 564 (1)? Did court
    require it here? Was there a change in
    insurability during that period?

35445 Alberta v. TransAmerica Life
  • 2 years had passed
  • tj found fraud
  • pl argued that insurers doctor knew of truth of

35445 Alberta v. TransAmerica Life (con't)
  • C of A affirmed tj - drs knowledge re insureds
    prior activities as pilot of ultra light planes
    not knowledge of insurer


Davidson v. Global
  • insured had policy with Global (March 1)
  • previously had discussed policy with Ocean
  • received letter from Ocean on Feb. confirming
    policy but premium, term not agreed to yet

Davidson v. Global (con't)
  • fire occurs March 1 Global seeks contribution
    from Ocean
  • Was there a policy wit Ocean on March 1?
  • What are essential terms of a contract of
  • definition of risk duration of contract
    premium amount insured

McCunn Estate v. CIBC
  • Mr. and Mrs. McCunn had separate lines of credit
    with CIBC
  • Mutual Life Ass insured lines of credit (in
    co-operation with CIBC)
  • CIBC changed its policy -no longer provided the
    insurance without cost

McCunn Estate v. CIBC (con't)
  • existing customers were in, unless they opted
    out, until age 70
  • Mr. and Mrs. consolidated the two lines of credit
    into one insurance co was informed
  • monthly premiums debited to the unified line of

McCunn Estate v. CIBC (con't)
  • Mrs. turned 70, but CIBC continued debiting line
    of credit until her death, 16 months later
  • CIBC admitted it was its mistake, reversing the
  • bank refused to apply insurance to reduce line of

McCunn Estate v. CIBC (con't)
  • Chadwicj J had rejected arguments of estoppel or
    reasonable expectation but held that Bank had by
    its conduct extended the term of the insurance
  • BORINS J (majority)

McCunn Estate v. CIBC (con't)
  • no offer to extend or acceptance - therefore no
  • no intention to extend on banks part
  • no reliance by Mrs. M
  • FELDMAN (dissenting)

McCunn Estate v. CIBC (con't)
  • offer and acceptance was present
  • Mrs. M knew money was being deducted and her
    silence connotes acceptance
  • no detrimental reliance necessary
  • this was not a computer error - computer was
    programmed to continue deducting

B. Cover Notes
  • a cover note is immediate, temporary cover

Buske v. Potter
  • insured obtained cover note on July 6. Paid
    premium requested. Cover note said that coverage
    was for July 7 - Jan. 7.
  • insurer claimed that cover was good for 15 days,
    that agent told him this, that premium was too
    low, that they sent insured notice requesting
    app. premium

Buske v. Potter (con't)
  • insured denied that he received anything
  • accident Aug 13
  • Was there coverage?

Buske v. Potter (con't)
  • see s. 612 insurer can issue certificate instead
    of policy
  • where premium and application form received and
    retained by insurer, strong presumption that
    proposal has been accepted

Bordeniuk v. Co-Operative Fire
  • s. 635 action
  • policy termination date April 27
  • auto renewal notice sent April 6 offering 6 month
    renewal if premium paid

Bordeniuk v. Co-Operative Fire (con't)
  • pink card sent having dates April 27 - May 11 (14
    day grace period after termination)
  • second notice sent April 24 - auto expiry
    notice, required premium to be paid within 10
    days of expiry
  • accident May 5

Bordeniuk v. Co-Operative Fire (con't)
  • insured did not renew or give notice of accident
  • is pink card a motor vehicle liability policy
    under s 635(5)?

Bordeniuk v. Co-Operative Fire (con't)
  • is a renewal certificate under s. 612(5) a policy
    under s. 635(5)?
  • what is a pink card - see s. 821 et s.

C. Duration of Cover Lumbermens Mutual v. Stone
  • s. 614 8
  • what happens if registered letter is sent to app
    post office but not received by insured?

Ellis v. London Canada
  • policy issued Sept. 1
  • Sept. 15 insured asked to return policy for
  • Sept. 20 policy returned, premium refunded and

Ellis v. London Canada (con't)
  • Sept. 23 accident
  • Does 15 day notice requirement of s. 6148 apply?

Krupich v. Safeco (con't)
  • registered letter to cancel sent Feb. 26
  • not received
  • premium refunded April 10

Krupich v. Safeco (con't)
  • fire April 26
  • was policy terminated before fire?
  • did Court agree with Lumbermens Mutual?

D. Interpretation of Terms
  • Two types of interpretation issues
  • was the risk that occurred (eg fire, theft,
    accidental death) covered?
  • did the loss claimed result from that risk?

Jesuit Fathers of Upper Canada v. Guardian
  • claims made policy - ie. if claim is made while
    policy is in force, it is covered
  • occurrence based policy - if the wrong arose
    during the period of policy it is covered, even
    if claim is made later
  • this was claims made general liability policy

Jesuit Fathers of Upper Canada v. Guardian
Insurance (con't)
  • issue here when were the claims made for
    residential school abuse?
  • when there is ambiguity in policy contra
    proferentem applies coverage is interpreted
    broadly exclusions are interpreted narrowly

Jesuit Fathers of Upper Canada v. Guardian
Insurance (con't)
  • give effect to reasonable expectations of parties
  • consider the context of the risk
  • Court held that claims made referred only to
    claims that were filed against the insured during
    policy period

Jesuit Fathers of Upper Canada v. Guardian
Insurance (con't)
  • here claim was made in letter Jan 27, 1994
  • insurer was informed of other possible claims on
    March 18, 1994

Jesuit Fathers of Upper Canada v. Guardian
Insurance (con't)
  • policy terminated Sept 30 1994
  • only Cs claim was made during term of policy
    therefore only duty was to defend against that

Brissette Estate v. Westbury Life
  • hus and wife had joint policy, proceeds payable
    to survivor
  • hus murdered wife 2 yrs and 2 months after policy
    came into effect
  • executor sought to claim proceeds on behalf of
    wifes estate

Brissette Estate v. Westbury Life (con't)
  • contract not ambiguous - payment is made to
    survivor - wife was not survivor
  • hus was survivor - but not entitled to the money
    because of public policy

Brissette Estate v. Westbury Life (con't)
  • whether constructive trust should be created
    depends on principles of equity not on
    interpretation of contract - here no constructive

Brissette Estate v. Westbury Life (con't)
  • insurance contract is a contract of adhesion (
    see p. 211 for characteristics)
  • reasonable intention of parties must be taken
    into account

Brissette Estate v. Westbury Life (con't)
  • policy is ambiguous - does not deal with this
  • public policy does not dictate that wifes estate
    should be disentitled
  • however Cory would not apply accidental death
    double indemnity provision

Amos v. ICBC
  • appellant shot by gang while driving his car
  • was this an injury caused by an accident that
    arises out of the ownership, use or operation of
    a vehicle?
  • look at prior jurisprudence regarding this phrase

Amos v. ICBC (con't)
  • two part test did accident result from ordinary
    and well known activities to which cars are put
    ie purpose test?
  • was there sone nexus or causal relationship
    between the injuries and the ownership, use or
    operation or was the connection merely incidental
    or fortuitous ie. causation test?

Amos v. ICBC (con't)
  • was the purpose test met here?
  • was causation test met?
  • need not be direct or proximate

Amos v. ICBC (con't)
  • why was the appellant shot and attacked in his
    car? Was this merely coincidental or was it
    related to their attempt to get the car? There
    was a connection between the use of the car and
    the injury.

Citadel v. Vytlingam (SCC)
  • vehicle struck by boulder thrown by F and R from
  • F was inadequately insured motorist
  • insureds sought to recover from their own insurer
    damages they obtained in civil judgment against F
    pursuant to inadequately insured motorist
    coverage in their policy

Citadel v. Vytlingam (SCC) (con't)
  • were these compensatory damages in respect of
    bodily injury to an insured person arising
    directly or indirectly from the use or operation
    of an automobile ( ie Fs automobile)?
  • Lower courts relied on Amos case gave coverage

Citadel v. Vytlingam (SCC) (con't)
  • SCC reversed.
  • purpose test met causation test not met
  • F was using his car as a car when transporting
    rocks to overpass no problem here

Citadel v. Vytlingam (SCC) (con't)
  • tort was intervening act severable from the use
    and operation of Fs vehicle
  • relaxed test of Amos re no fault benefits cannot
    be applied in indemnification insurance context
  • here F was liable not as a motorist but as
    tortfeasor who dropped boulder

Herbison v. Lumbermens (SCC)
  • victim creditors action against insurance co of
  • same reasoning as Citadel
  • the tortfeasors act of negligently shooting
    victim was independent from his use and operation
    of his vehicle to get to place where he got out
    of his car to hunt.
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