Is your Rental Property Insurance Void if the property is vacant over 30 days

A recent case demonstrates the importance of carefully reading an insurance policy and ensuring that the insurance policy remains in force. Failing to do so cost Paul Wu and Wendy Wu dearly. Background The Wus purchased a house in Windsor, Ontario to serve as an investment for their future and to produce rental income. In 2002, they rented the house to a tenant. This tenancy was uneventful until the tenant began to date a certain man. At this point, garbage, including junk cars and tires, began to accumulate in the yard and neighbours complained of blight and rats. The Wus were given repeated notices by the City of Windsor to clean up their property. Eventually, the Wus gave their tenant notice to vacate the property. The tenant agreed to move out on August 1, 2006; however, the tenant and her boyfriend failed to leave that day. The Wus permitted them to stay until August 5, with the tenant agreeing to clean up the property before leaving. On August 4, the tenant and her boyfriend moved out of the house and gave Mrs. Wu keys to the property. As it turned out, those keys were for the front door only. The property as left by the tenants was in a serious state of disrepair and the house had a very foul odour. The Wus, along with some friends, spent considerable time cleaning up the house and the property and, six weeks later, made the property available for renting. During this time, and in advance of a new tenancy that was to begin on November 1, 2006, the Wus visited the property nearly every day to clean up the property and to empty the mailbox. In mid-October of 2006, a fire caused major damage to the property. On October 11, Mr. Wu visited the house and discovered that the interior was burned and that the water pipes had burst, resulting in significant damage. There was no sign of forced entry to the house, and the presence of gas cans suggested that the fire had been lit deliberately. A representative of the Windsor Fire Department opined that the fire had been intentional. There were also beer cans inside the house that had not been there the last time Mr. Wu had entered the house. Insurance Claim The Wus sought to claim under their insurance policy, which they believed covered fire damage and loss of rental income. Gore Mutual Insurance Company (“Gore”) denied coverage under two grounds: first, that the Wus allegedly had knowledge that the house was vacant for more than thirty consecutive days, in violation of the policy; and second, that there was a material change in risk of which the...

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