– Keizer v. Portage LaPrairie Mutual Insurance Co., 2013 NSSC 118.

Keizer was a carpenter by trade. In 2008, he decided to begin doing carpentry and furniture repair work in a woodworking shop he set up in his garage, which was heated by a wood stove. He informed his insurance broker, Founders, of these intentions. Founders neglected to pass this information along to the underwriter, Portage. In 2009, a fire broke out in the garage. Keizer submitted a property loss claim to Founders, who in turn reported the loss to Portage. Portage denied Keizer’s claim on the basis that it had not been informed that Keizer was using his garage as a woodworking shop. Keizer brought a claim against Founders and Portage.

The court dismissed Keizer’s claim against Portage for indemnity under the insurance policy. The court found that using the garage as a woodworking shop constituted a material change in risk of which Portage had not been informed. The combination of a woodworking shop with a wood stove was not a risk to which Portage would have provided coverage. Furthermore, Keizer was not entitled to relief against forfeiture under s. 171 of the Insurance Act. Requiring Portage to pay a claim for a risk it never would have accepted would cause significant prejudice to Portage.

The court next considered Keizer’s claim against Founders, which was made on the basis of negligence and breach of contract. The negligence claim succeeded. The court found that, once informed of Keizer’s intended business activity, Founders had a duty to inquire to determine whether it might constitute a material change in risk under the insurance policy. “The goal of a broker,” the court found, “is to identify the exposures of risk of the clients and to match them up with the necessary coverages.”