Innocent plaintiff denied coverage due to marijuana exclusion clause

Insurer relies on marijuana exclusion clause to effectively deny coverage to an innocent homeowner whose property was destroyed by renters, prior to Insurance Act s.129.1 protection amendment for innocent persons coming into force.

Insurance law – Homeowner’s insurance – Exclusions – Statutory provisions – Innocent insured – Co-insurance – Interpretation of legislation – Retrospective application of legislation – Practice – Summary judgments

Lin v. Weng, [2020] O.J. No. 5532, 2020 ONSC 7137, Ontario Superior Court of Justice, November 23, 2020, A. Pinto J.

The insured and insurers each sought summary judgment in respect of a home insurance coverage dispute.

In the underlying action, the insured homeowner rented a bedroom to a tenant, and the tenant subsequently attempted to extract resin from marijuana in the basement of the home, causing an explosion and fire that destroyed the property.

The insurer denied the insured’s property loss claim, relying on the policy’s marijuana exclusion clause.

The fire occurred, and the action was commenced, prior to amendments to Ontario’s Insurance Act that were designed to protect innocent persons coming into force.  The new provision provided protection to innocent persons stipulating that exclusions for loss caused by a criminal or intentional act applies to only those who caused, consented or abetted the act.

The court found that the amendment did not apply retrospectively, and the claim was excluded from coverage by the marijuana exclusion.

This case was digested by Erika L. Decker, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Erika L. Decker at [email protected].

To stay current with the new case law and emerging legal issues in this area, subscribe here.