Marijuana exclusion in homeowner policy of insurance ambiguous

Marijuana exclusion in homeowner policy of insurance ambiguous.

Insurance law – Homeowner’s insurance – Exclusions – Practice – Appeals

Busato v. Gore Mutual Insurance Co., [2025] B.C.J. No. 427, British Columbia Court of Appeal, March 14, 2025, B. Fisher, S.A. Griffin and J. Winteringham JJ.A.

The insured’s home was destroyed by a fire which started in the kitchen. The insured made a claim under his home insurance policy. During its investigation, the insurer learned that the insured was growing approximately 25 marijuana plants pursuant to a valid licence issued by Health Canada. The insurer denied coverage for the loss relying on an exclusion relating to marijuana cultivation on the property. The insured sued on the policy. The claim proceeded to a summary trial. The court dismissed the insured’s claim against the insurer. The insured appealed.

The Court of Appeal allowed the appeal. The court held the exclusion clause is ambiguous and should be interpreted narrowly and in favour of the insured. Specifically, the Court of Appeal held that the exclusion is ambiguous as to which particular substances trigger the exclusion. The court went on to hold that, if it were necessary to so find, it would find that the exclusion clause creates an unjust and unreasonable result and therefore would not be binding on the insured under s. 32 (relief from forfeiture) of the Insurance Act.

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].