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Fire Loss and Burn Claims in Ontario

Some of the most devastating and gruesome injuries which our personal injury lawyers see occur as a result of fire. Fires in homes. Fires in apartments. Fires in condominiums. Fires in commercial units. Fires cause devastation to person and property. They also kill.

Often in fire injury and fire loss claims, damages are almost secondary for the lawyers. All of the lawyers for both Plaintiff and Defence recognize the loss suffered by the burn victim. The lawyers may argue about the extent of the damages and the impact and duration of those damages. But reasonable lawyers will recognize that serious burns cause serious injuries which have life long physical and psychological consequences.

Where things can tricky is when it comes to who will pay for those damages.

All lawyers are taught that it’s very important to sue a party with deep pockets; meaning that you have to make sure that you can sue a party who can pay a judgment or payout on a settlement.

If you sue a party with no assets, you have nothing to collect upon. The judgment which a Plaintiff is awarded is without any material value because you cannot collect from an impecunious party. Think of it like you can’t get blood from a stone.

The same adage applies to fire loss claims. Generally in personal injury cases, lawyers see insurance companies defend their insureds, and payout damages on a judment or settlement.

The same cannot be said in burn cases and fire loss cases.

For starters, there is no requirement for a private property owner to actually have insurance on his/her property. If the property is owned without any mortgage, the property owner may not be insured. The property itself becomes the asset which the Plaintiff needs to collect upon. But what happens if there are liens or other encumbrances on that property? There is also a risk that the Defendant will mortgage or sell his/her property during the course of litigation. It would then be up to a Plaintiff to prove there was not an arms length transfer which is not easy to do. What happens if the property is worth $500,000; but the damages of the Plaintiff are $800,000? The Plaintiff would only be able to secure a lien on the property for $500,000 and would be out $300,000 should the Defendant not hold any other assets.

Often times our personal injury lawyers see insurers denying coverage to the Defendant property owner because they are in breach of their policy. Here are a few examples of breach of policy:

  1. Failure to pay insurance premiums. This is an easy out for the insurer. If the Defendant hasn’t paid their premiums, or their policy has lapsed, there will be no coverage. Such a situation may sound like a good thing for a Plaintiff, but the reality is that it will make it more difficult for a Plaintiff to get the compensation they deserve in the long term. Having an insurer to fight with is not a bad thing when it comes to recovery
  2. Material misrepresentation: The Defendant property owner tells the insurer that the property is a commercial property, when in fact the Defendant property owner is renting out the place to residential tenants. In such a case, the insurer won’t cover the Defendant property owner because they lied to them.
  3. Unknown sublets: The property is subleased to by a tenant to residential tenant without the knowledge of the insurer, and/or without the knowledge of the Defendant owner. Some leases do not permit for subleases without the express written consent of the owner, or without the knowledge of the insurer
  4. Arson or breach of the fire code: Property insurance policies won’t pay out where arson is suspected, or when there was a blatant breach of the fire code by the property owner. When the property owner knew and was warned many times that their building did not meet the fire code, don’t expect an insurer to help out much on the claim. The owner will be left carrying the bag, and if the owner doesn’t have any material assets upon which to claim, recovery can be tricky.linkedin-2-300x300

Please don’t confuse the civil side, with the criminal or regulatory side of the things. In the material breach, arson and unknown sublet examples set out above, it’s clear that the Defendant property owner or tenant on the lease committed a wrong which is punishable at law. From the criminal or regulatory side of things, this may result in a fine, or jail time. But this does not guarantee recovery in a personal injury law suit. While the case against the wrong doer will likely be sucessful in civil court, it does not mean that a Plaintiff will get paid when there are no assets to collect upon from the at fault Defendant.

If you are a renter, it’s important to secure you own renters insurance. This will protect your belongings and will also protect you in the event that the owner is uninsured, or underinsured. In the event of fire, the tenant can rely n this policy to get they help they need. This help can include finding and paying for alternative accommodations; payment for the destroyed goods; and protection after a burn claim. Don’t rely on the property owner or landlord to supply this type of insurance. Get it for yourself to stay protected.

Our personal injury lawyers also encourage renters to know what they are getting themselves into when they find a new place. Get a proper lease agreement in writing. Find out in writing if you are allowed to sublet, and what the use of the property is for. You don’t want to be living in a commercial property which is insured for commercial purposes while paying cash to a landlord who tells you that “it’s cool” for you to live there so long as you pay rent in cash and not tell anyone about it. These sort of things should raise a red flag for the prospective tenant as their rights won’t be accounted for should things go wrong.

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