Property owners whose homes suffer significant water or fire damage may need to get a legal opinion to back up their claim for coverage, says Toronto insurance lawyer Rohan Haté.

When disaster strikes, having a valid home insurance policy is not your only concern, according to Haté. In the last few years, he has helped several clients fight back after learning the hard way that insurers don’t always have the best interests of their policyholders at heart.

“Whenever something serious happens, the first thing you need to do is report the damage and complete a proof of loss form, but the next thing you should do is to get a legal opinion on coverage,” Haté says. “The longer you take, the more likely it is that the insurance company will take the position there’s no coverage available and come after you for costs.”

Fire destroys three townhomes

In one case, Haté’s client owned three neighboring townhomes that were destroyed in an arson attack. At the time of the fire, the man lived in one of the properties and rented another out, while the third home was vacant.

Haté says few homeowners realize that they may be required to notify their insurance company if their property is vacant — for as little as 30 days in a row — due to the higher risk of damage. However, his client had informed his insurer about the vacancy, and the company responded by adding a requirement to the policy that he check the vacant home at least once every three days.

“This man escaped the fire in his own home by the skin of his teeth, and the next day the insurance company sends someone to see him,” Haté says. “But they weren’t interested in seeing how he was; they were there to make sure he had been going to the vacant home as he had promised.”

Insurer refuses to pay out full claim

Although the owner had fulfilled his duties, the insurer still took the position that it wouldn’t cover the damage on the property because it was vacant. In addition, the insurer refused to pay out the full $200,000 Haté’s client expected for each of the other two units under the policy, claiming that they had depreciated in value.

“It put him in a terrible position, because he would never be able to rebuild all three homes when they weren’t covering one of the units at all, and they weren’t paying him the full replacement value for the other two,” Haté explains.

After suing the insurer, Haté’s client was also forced to cover the cost of his own appraisal to challenge the insurance company’s claims about the property’s alleged drop in value.

“Eventually, after about five years, the insurer finally paid my client the full amount plus legal costs, which came out at more than $600,000,” Haté says. “We achieved 100 per cent success, but it took a long time to get there, and there were a lot of hoops to jump through.”

Who’s on the hook for water damage?

Another client turned to Haté after her unit in a condominium unit suffered serious water damage following a plumber’s attempt to replace a valve in her sink.

The woman’s insurer initially denied the claim on the basis that her policy did not cover the faulty workmanship that had caused the leak. To make matters worse, the condo corporation also came after her for $150,000, holding her responsible for the leaks that had spread from her condo to units on the floors beneath.

After studying his client’s insurance policy closely, Haté was able to nip the problem in the bud, identifying coverage under the contract and convincing the insurer to pay for the damage.

“The moral of the story is that getting an opinion on coverage is one of the first things you should be thinking about when you make a claim against your home insurance for fire loss or water damage,” he says.