Nightmare Insurance Scenarios

Off Coverage Position, What Do I Do?

When you acquire insurance for your home or motor vehicle, you are signing a contract with that insurer. That contract has terms that you are to follow in order to continue to be covered by your insurer under your insurance policy. When you are in a motor vehicle accident, whether you are the cause of it or not, your home is damaged, or someone is injured on your property, your insurer usually steps in to assist you in the following legal proceeding. But what if your insurer does not seek to assist you?

When your insurer decides that it will not cover your actions under your insurance policy, your insurer has taken what is known as an “off-coverage position.” When your insurer takes this position, it is no longer representing your legal interest in the legal proceeding. Instead, they seek to add themselves as a statutory Third Party to the action, pursuant to section 258(14) of the Insurance Act. This means that although your insurer will continue to participate in the proceeding, taking part in discoveries and likely stating in their defence that you are not liable, their goal, if the legal proceeding proceeds to trial, is to be found not to be liable for your actions under the insurance contract by the courts. When your employer takes an off-coverage position, you need to seek independent legal counsel to represent you. 

So how can you prevent this from happening, you ask? The answer is simple. Make sure you tell your insurance company about changes in circumstance that may affect the terms of your policy, or you may be out of luck if disaster strikes. Keeping your insurance current means updating the policyholder when things change. The onus is on you to update your insurer, as your insurance provider will keep taking your money every month, relying on the assumption that your circumstances, which formed the original policy, have not changed. 

Here are some common examples of critical mistakes that result in loss of coverage:

  • You put a new expensive kitchen (or any reno) in your home and do not tell your insurance company
  • You bring in new occupants or renters for an extended period of time
  • You change your fireplace or install a gas fireplace, change your plumbing or hot water heaters, fail to maintain your septic, change roofing/shingle materials
  • Even major tree removal can affect your home policy coverage
  • If you get a dog, make sure your policyholder knows about it as you don’t want to have to pay for an accidental dog bite (home insurance covers pets who make mistakes… not attack dogs, however)
  • You modify your vehicle beyond original specs and don’t update the policy
  • You start to regularly let someone borrow your car, and don’t let the insurance company know about the extra use
  • You use your car for extra work duties making it a work vehicle rather than a personal vehicle
  • You do something while at work that is not part of your job resulting in the employer’s insurance company saying you were operating outside of your work duties, 

If an accident, fire, injury or any of the above occur and your insure wasn’t aware of the change in circumstances, you may not be compensated because the policy had not been updated to allow the insurer to reassess risk (which, let’s be honest, really means they haven’t had a chance to increase your fees). 

If your residence has a fire, do not assume that all your contents will be replaced, as often expensive pieces must be listed on the policy. So, if you buy a piece of art or an expensive watch or ring, add it to the policy; it will cost peanuts but could make a huge difference in case of emergency.

One last piece of legal advice is to protect your interests. Take a picture of all your important documents and store the images somewhere safe, like in the cloud or on an external hard drive in a fire proof safe or cabinet. If there is a fire, you will have a digital backup. 

Contact Millars Law if your insurer has taken an off-coverage position so that we can assist you in your legal matter and answer any further questions or concerns you may have.