The CBC recently contacted me to comment on a story that perfectly represents the growing problem of insurers hiding behind complex policies.
The story is covered in full at the CBC Website. However, in brief it concerns a couple, Michael and Diane Uniac, who for the past 19 years have fled their Waterloo, Ontario home for a few months each winter to enjoy the sunny beaches of Florida.
Like most Canadians living in regions where temperatures dip well below zero, the Uniacs always make sure to turn off the water in their home before leaving for the winter. However, the Uniacs did not turn off their fire sprinkler system. In fact, it would be a breach of the building code for the Uniacs to have disabled their fire sprinkler. Sadly, the unthinkable happened: the pipe supplying water to the sprinkler heads froze and burst, severely damaging all four levels of the Uniac’s townhouse.
The result was $250,000 to $300,000 worth of damage. The Uniacs were shocked. Imagine coming home after a relaxing Florida holiday only to find insulation hanging from your roof, ceiling fans on the ground, and your walls falling off their frames. It would be a horrifying experience. However, thankfully the Uniacs were insured or so they thought.
This is where things get bizarre. Their insurer, Intact, denied the claim. The insurer claimed that under their policy, all the water needed to be turned off and drained, including the fire sprinkler. The Uniacs called their insurance broker who was mystified. He told the Uniacs flat out that they should be covered and that no insurer in their right mind would ask anyone to turn off their fire system for the full duration of the winter.
It’s important to consider that even the Uniac’s broker – a man who is paid to interpret and explain policies – was finding it difficult to comprehend the range of complexities hidden in Intact’s policy. This begs the question: if an insurance broker can’t understand the policy they are selling, what hope did the Uniacs have? Quite frankly, there is little that the Uniacs could have done to avoid this tragedy (they have retained legal counsel, which is a good first step in seeking full compensation). The real problem is with the policy involved, not the people who purchased it in an attempt to be responsible, law abiding home owners.
This story speaks to the difficult issue of an insurance industry that is struggling to understand the very policies that it is selling. The solution to this problem is obvious: the industry needs to make information simpler for people to digest and for broker’s themselves to understand. No one should be forced to lose their home over poorly-interpreted fine print.
If you have had an insurance claim denied, please feel free to contact a lawyer at Murphy Battista LLP for more information.
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