Policy voided after marijuana grow-op discovered following a fire

The insurer’s decision to void the policy after a marijuana grow-operation was discovered following a fire was upheld at trial.

Insurance law – Fire insurance – Material change in risk – Breach of policy – Statutory conditions; Evidence; Duties and liabilities of insurer.

Kallu v. Wawanesa Mutual Insurance Co., [2025] B.C.J. No. 1699, British Columbia Supreme Court, September 4, 2025, J.L. Whately J.

The insureds purchased a property with a home and detached outbuilding in 2015. Coverage with the insurer was renewed on an annual basis. In 2018, the home was damaged from fire sparked from a prayer candle. An adjuster attended at the property and documented evidence of approximately 200 marijuana plants in the outbuilding. The insurer voided the policy on the basis of a material change in risk that was not disclosed prior to the fire. The insureds commenced a civil action against the insurer for breach of contract.

The insureds’ claim was dismissed in its entirety at trial. The court accepted the evidence presented by the insurer, by way of its personal lines underwriting manager and an underwriting expert, that the presence of a marijuana grow operation, even a non-operational one, is information that is material to the risk for a reasonable property insurer. Although the insureds argued it was not material, they failed to present any evidence with respect to the insurer’s approach to risk assessment being markedly or at all different from any other insurer in the standard homeowner policy market.

As part of its analysis, the court acknowledged there is some variability in the case law as to whether it is necessary that the insureds had subjective knowledge of the change in risk, or that the change was material. In this case, it was not necessary to address the issue because the court found that the insureds had subjective knowledge of the change in risk. The insureds were not credible witnesses and their claims that they were unaware of the grow operation or that it pre-existed their ownership of the property was inconsistent with the evidence at trial.

This case was digested by Michael J. Robinson and edited by Steven W. Abramson of Harper Grey LLP.  If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].