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Real estate insurance may be denied if changes aren't reported

Landlords have many things to consider when leasing a property, including provincial laws and insurance coverage. A recent case in Alberta showed the importance of abiding by the requirements of property insurance, including stipulations about vacancy. Those who purchase real estate for the purpose of leasing it to tenants should consider cases such as this when caring for their rental property.

In the recent Alberta case, a landlord decided to renovate his rental property in 2015 during the summer, while he was between tenants. He parked a camping trailer on the lot so he could sleep there occasionally while fixing up his rental real estate. During this time, the roof of the rental house caught fire. The owner was denied insurance payment for the event, as there was a clause in his policy that voided coverage if the property was "vacant" for over 30 days in a row.

The owner sued the insurance company, but the lawsuit was dismissed. Had the owner contacted the insurance company to let it know about the temporary vacancy, the clause may have been waived. This issue is relevant to homeowners and landlords across Canada. Case law from across the country is full of stories of owners who were denied insurance coverage due to failure to report a "material change."

Material changes are not limited to vacancies. Insurance can also be denied to those who do not get explicit permission to conduct commercial activity on their property, or who have errors in insurance applications. Those who have questions or concerns about their rights and responsibilities with real estate insurers under Alberta law should contact a lawyer.

Source: The Globe and Mail, "Is your home or income property insured when it's vacant?", Gord McGuire, Dec. 4, 2017

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