Burned house raises replacement insurance

Janice Musatov, LL.B.
Contributing Columnist

ROBERT Morton’s old
Vancouver home had
seen better days.

He rented the 1,175-
square-foot (109 sq. m)
wooden bungalow to tcn-
ants. When they left, he shut
off the water and gas and
waited for approval to rede-

. velop the site. He planned to
build a triplex rental build-
ing.

Three weeks after the ten-
ants vacated, vandals burned
the house down. Morton
subsequently got his develop-
ment permit and built his
new triplex.

The triplex was 5,085
square feet (472..sq. m) of
luxury. His own personal
unit was a tad under 2,000
square feet (189 sq. m). The
whole structure cost .
$548,009 to build and the
local press praised its design.
2° 3 Morton had insured the
, Original house with Canadian
: Northern Shield insurance

t coho a

Company. But after he
rebuilt the property, the
insurer refused to pay for the
cost. Right or wrong?

Both sides won a little bit
in this case.

First, the insurer argued
that if it had known the
house was going to be empty
after the tenants left, it either
wouldn’t have continued to
insure the property or it
would have increased the
insurance premiums. The
insurer said the vacancy sig-
nificantly changed the risk it
had agreed to insure and
increased the chances of
damage to the property.

But the court said the
insurance policy covered a

SHOPPING CENTR
(South) OPENING
EC. Sth by FOOD COURT

period of vacancy of up to 30
Favs. The fire here occurred
within three weeks of the
house being vacated. So the
insurer was on the hook.

Bur then the insurer
argued that it shouldn’s have
to pay for building a bigger,
fancier property. ft claimed in
was just responsible for
rebuilding the same original
house.

Morton, however, said:
“(I) should not be penalized
for declining te slavishly
replace the house precisely in
its original form.”

Morton had replacement-
cost insurance. You may too.
His policy said he could
recover 80% of the cost to
repair or replace the property
or the “actual cash value” of
the damage.

This type of insurance
basically means that you have
two choices if your home or
contents are damaged or
destroyed. One, you can buy
a new rug to replace the old
one damaged in a basement
flood or rebuild an equiva-
lent house, and the insurer

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Wednesday, December 15, 1999 - North Shore News - 23

will pay for this. Or, two, you
can ask for cash equal ro the
value of what the old rug or
house was worth.

The judge agreed with
Morton that he didn’t have
to rebuild the exact same
1,175 square-fuot bungalow.
But the judge also said: “A
building which has three sep-
arate dwelling units and a
total area 271.2% larger than
the single-family dwelling it
replaces is not a building of

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Sf by-the Sea

the same occupancy.”

In the end, the insurer
only had to pay Morten
$26,500, being the value of
the old house that burned
down. (The land was much
more valuable than the actual
house.) But, as the judge
noted, Morton too received

“something of a windfall: he
(got) $26,500 for a building
he planned to demolish any-
way.”

Read vour house policy

issue.

carefully so you know what is
and isn’t covered. And if you
have an insurance problem
you can’t resolve, consult a
lawyer.

— This column has been
written with the assistance of
Daryl Collier of the North
Vancouver law firm of RAT-

CLIFF & COMPANY, Suite
500, 221 West Esplanade, 988-
5201. The column provides
information only and must not
be relied on for legal advice.

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