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In a decision released on December 5, 2005, the Supreme Court of British Columbia considered a coverage dispute between the Plaintiff, Mr. Abell, and M. J. Oppenheim in his capacity as attorney in Canada for Lloyd’s Underwriters. Mr. Abell purchased a floating home and continued the insurance policy held by the vendors. The policy contained a warranty that the dwelling would be permanently moored at the location described in the policy. Mr. Abell moved his new home to a floating home community called Queensgate, which was under development at the time. He advised the insurer that the home would be moored at Queensgate and they processed the change to the policy.

However, Mr. Abell’s deal to buy a lot at Queensgate fell through and the owners of the development required him to move his floating home. After he ignored several warnings, the owners moved it for him, to an undeveloped part of the property, where it was tied with rope to offshore pilings. There was no security or fire service available in that part of the development.

At one point, the roof of the home was damaged as a result of banging against the pilings and the insurer sent an adjuster to examine the damage. On that occasion, the adjuster told Mr. Abell that he may have some problems with respect to his insurance coverage, but Mr. Abell took no steps to address the issue. Subsequently, the floating home was completely destroyed by fire. Lloyd’s denied coverage on the basis that Mr. Abell had breached the warranty in the policy and that there had been a material change in risk.

The Court found for the insurer on both points. With respect to the breach of warranty, the Court found that the warranty was reasonable, that Mr. Abell was aware of it and that it had been breached. With respect to material change in the risk, the Court stated that the test for materiality is “…whether a fact would be of such a nature that if it were known to a prudent and reasonable insurer it would have influenced the insurer to either decline the risk or charge a higher premium”. In this case, it was found that the insurer would only have insured the floating home if it were moored in a location where security and fire services are available.

Mr. Abell tried several other arguments including that the policy was ambiguous and that he should be entitled to relief from forfeiture. These arguments were rejected. He argued that the insurer should not be entitled to rely on the breach of warranty, because its adjuster had seen the location of the floating home when it investigated the damage to the roof. However, the Court held that Mr. Abell had not pleaded estoppel and that in any event the evidence fell short of establishing that the insurer was sufficiently informed of the location of the floating home so as to trigger an obligation to notify Mr. Abell that his coverage had been terminated.

Abell v. M. J. Oppenheim, 2005 BCSC 1715