Insurer does not owe duty of care to tenant of insured premises

Insurer does not owe duty of care to tenant of insured premises.

Insurance law – Property insurance – Landlord and tenant – Practice – Summary judgments

Intact Insurance Co. v. Little Poultry Co., [2025] P.E.I.J. 21, Prince Edward Island Supreme Court, March 4, 2025, K.R. MacDonald J.

The insurer brought a motion for summary judgment to dismiss the respondent’s claim as disclosing no genuine issue for trial. The motion was allowed.

The insurer insured a commercial building. The insurer did not insure any of the tenants and tenant improvements, equipment and personal property were specifically excluded. The insured notified the insurer of a claim for damages arising from a ruptured water supply line from the furnace. A claims representative attended the premises to observe the extent of the damage along with other representatives of the insurer and the insured. A plumber identified the likely cause as a rupture of the end cap of the manifold for the in-floor heating system. There was no evidence to suggest any negligence or intentional damage. The insured repaired the damage with the insurer’s involvement.

Later, the insurer learned from the insured that the respondent was making allegations about the insured suggesting wrongdoing in relation to the flood. The insurer met with the respondent but none of the information provided indicated that an insurance fraud had taken place.

In the underlying claim, a statement of claim was issued against the respondent in relation to the rental of commercial kitchen equipment in a commercial unit within the insured premises. The respondent filed a statement of defence and counterclaim and third-party proceedings against ten parties including the insurer. The insurer brought its motion for summary judgment.

The respondent’s claim against the insurer was in essence that it failed to investigate a potential crime and the respondent was denied the opportunity to have the matter properly investigated. The claim was framed in negligence. The insurer sought to dismiss the claim on the basis that it did not and could not owe a duty of care to a tenant of the premises. The court accepted that based on the pleadings and the evidence tendered in support of the motion, the insurer did not owe a duty of care to the respondent.

This case was digested by Cameron B. Elder and edited by Steven W. Abramson of Harper Grey LLP 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 feel free to contact them directly at [email protected] or [email protected].