Material Misrepresentations and Changes in Risk

August 1, 2022

Material Misrepresentations and Changes in Risk


Mike Libby and Riordan Bacha

August 2022


In the course of investigating a loss, insurers may find that their insured has provided incorrect or incomplete information when applying for insurance, or that where appropriate information was provided on the application, the circumstances have changed after policy inception in a manner that adversely affects the insurer. This paper will address the common law and legislative remedies available to insurers in Canada who are faced with such scenarios.

A.          Overview

An insurance contract is one of uberrima fides or of utmost good faith. While this principle applies to both the insurer and the insured, it has important implications on an insured’s obligation to disclose information. Put another way, an insured’s obligation to disclose material information arises from the speculative nature of an insurance contract. Insurers are in the business of speculating about the future, but they need information about the nature and extent of the risk to be insured, in order to assess the likelihood that it will materialize. Insurers typically don’t have much, if any, access to this information, so they have to get it from the insured. While the insured expects to be treated fairly if a claim is made, the insurer is entitled to be treated fairly when the contract is being formed.

This relationship of mutual reliance makes a contract of insurance special and forms the basis for the duty of good faith. In Lee v. Canadian Northern Shield Insurance Co., the Court discussed this interaction, stating:

[42]             …The principle of utmost good faith applies to contracts for insurance. An insured has the obligation to make full and accurate disclosure of all information which is relevant to the proposed insurance coverage. The insurance underwriter must trust those representations in order to determine if it wishes to underwrite that risk, and if so, to accurately assess the risk. If the insured fails to disclose information or keeps information back through intention or mistake, the policy is void. In other words, the basis of an insurance policy is that the insurer understand the risk involved and intend to assume it; it therefore must know all the relevant information in order to assess the risk.

As issues regarding the disclosure of material information account for a large number of cases which proceed to court, it is important for both underwriting and claims personnel to understand the consequences of an insured’s failure to disclose such information.

This paper will address the issue of insured’s material disclosure in four stages. First, we will briefly discuss the statutory background from which the disclosure obligations flow. Second, we will look at the concepts of materiality and material information, to understand what insureds ought to disclose. Third, we will examine failures to disclose material information before an insurance contract has been agreed (i.e., misrepresentation). Finally, we review failures to disclose material changes in risk that occur after a policy has been issued (i.e. change in risk).

B.          The Statutory Background

An insured’s obligation to disclose all material information prior to the insurance contract coming into effect existed at common law as part of the principle of utmost good faith, long before the passage of legislation governing insurance contracts. It also requires insureds to disclose changes in circumstances that occur between the completion of the insurance application and the issuance of the policy.

With the adoption of insurance legislation across all Canadian provinces and territories, a failure to disclose material information is now typically codified in the statutory regime governing the particular kind of insurance at issue. As such, the underlying common law duty may be augmented depending on the wording of the applicable legislative section(s) as well as the specific language contained in any given policy.

The obligations regarding disclosure of material information are found in insurance statutes across the country. While specific provisions vary by jurisdiction and type of insurance, this paper will primarily consider British Columbia’s Insurance Act to demonstrate those obligations. British Columbia’s provisions are similar to many other provinces, and they provide a useful and practical way to consider the requirements to disclose material information without resort to a discussion of all of them. British Columbia’s regime also has the added bonus of being relatively compact, when compared with parallel legislation in other jurisdictions, which is beneficial to understanding the underlying principles.

British Columbia’s statutory conditions 1 and 4 in section 29 of the Insurance Act are deemed to be incorporated into every insurance contract to which section 29 applies, and must be printed in such insurance contracts. Those sections read as follows:


1.          If a person applying for insurance falsely describes the property to the prejudice of the insurer, or misrepresents or fraudulently omits to communicate any circumstance that is material to be made known to the insurer in order to enable it to judge the risk to be undertaken, the contract is void as to any property in relation to which the misrepresentation or omission is material.


Material change in risk

4.          (1)          The insured must promptly give notice in writing to the insurer or its agent of a change that is

(a)          material to the risk, and

(b)          within the control and knowledge of the insured.

(2)        If an insurer or its agent is not promptly notified of a change under subparagraph (1) of this condition, the contract is void as to the part affected by the change.

(3)        If an insurer or its agent is notified of a change under subparagraph (1) of this condition, the insurer may

(a)          terminate the contract in accordance with Statutory Condition 5, or

(b)          notify the insured in writing that, if the insured desires the contract to continue in force, the insured must, within 15 days after receipt of the notice, pay to the insurer an additional premium specified in the notice.

(4)        If the insured fails to pay an additional premium when required to do so under subparagraph (3) (b) of this condition, the contract is terminated at that time and Statutory Condition 5 (2) (a) applies in respect of the unearned portion of the premium.

In addition, a materiality requirement is incorporated into the above through section 17 of the Insurance Act, which states that:

Misrepresentation and nondisclosure

17   (1)   A contract is not rendered void or voidable by reason of any misrepresentation, or any failure to disclose on the part of the insured in the application or proposal for the insurance or otherwise, unless the misrepresentation or failure to disclose is material to the contract.

(2)   The question of materiality is a question of fact.

As will be seen below, an insured’s common law obligation to disclose all material information as part of the principle of utmost good faith continues to exist, and has been widely incorporated into the parallel statutory obligation built into the various insurance statutes. This statutory incorporation of the principle has, in many cases, augmented the common law notion of disclosure.


A.          What Constitutes Materiality

The test for materiality is a simple one. It was adopted by the Supreme Court of Canada decades ago in Henwood v. Prudential Insurance Co. of America, and has been articulated by courts across Canada numerous times. The substance of the test for materiality of information or facts is whether the true facts or information would “have influenced a reasonable insurer to decline a risk or to have stipulated for a higher premium”.

Proving materiality in court typically involves adducing evidence from the insurer’s representatives about the insurer’s actual practices to substantiate the assertion that, had the correct facts or information be known, the insurer would have declined to insure the risk or required additional premium. This may include underwriting guidelines, binding authorities, and corporate risk appetite. Further, as the test is one of a “reasonable or prudent” insurer, expert evidence on insurance industry practices is often adduced to demonstrate that the insurer’s practices were reasonable or prudent, in line with industry norms.

While we use the term “material information” in this paper, the courts sometimes use the synonymous phrase “material fact”, which highlights a necessary element: that the material information must be factual in nature. The insurer is entitled to have access to factual information when assessing and speculating on the risk to be insured. It is not, however, entitled to the insured’s opinions or thoughts.

B.          Limits to the Insured’s Duty

An insured’s duty to disclose material information is broad, and insured can be expected to disclose material information even if the insurer does not specifically ask questions that would require such disclosure. However, it is not unlimited, and is subject to two important qualifications.

First, insureds are not required to be omniscient. The assessment of whether an insured should have disclosed information has both subjective and objective elements, i.e., what the insured ought to have known, and what the insured actually knew. An insured cannot rely on its own subjective ignorance to avoid disclosing material information, but nor is an insured required to know everything about the risk – the standard is one of reasonableness.

Second, insureds are not required to disclose (and cannot be faulted for not disclosing) what a reasonable insurer already knew (or ought to have known) prior to the inception of the contract. In Silva v. Sizoo, the court reviewed the case law regarding an insurer’s alleged duty to investigate on an application for insurance, and summarized the insurer’s obligation as follows:

[97]      In summary, these cases show that the rule that insureds are bound to disclose all material facts on pain of having the policy avoided is alive and well. It is, as it always has been, subject to some exceptions. An insured need not disclose what the insurer actually knows, nor that which is so notorious in the industry or place concerned that any competent underwriter in the field would know it. There is a duty on an insurer not to close his eyes to the obvious, to that which is tantamount to notice; and not to refrain from asking because he prefers not to know the answer to a question which stares him in the face. There may be others, I do not pretend to be exhaustive. But there is no general duty owed by an underwriter to an applicant for coverage to conduct a reasonable investigation or otherwise to act as a reasonably competent underwriter. “Plaintiff may not shift the burden of truthfulness which was upon the insured into a burden of distrust and additional inquiry on the part of the defendant”.

One striking example of an insurer’s failure to review its own underwriting is Coronation Insurance Co. v. Taku Air Transport Ltd., in which an insurer initially refused to renew a policy because the insured had been involved in three accidents over the policy period, but then issued a new policy seven years later relying only on the insured’s statement he had only had one accident over the past decade. The majority of the Supreme Court of Canada stated that the policy could not be avoided on the basis of the misrepresentation because, “[a]t a minimum, the insurers should have scrutinized their own records before issuing the policy”, and the misrepresentation concerned information “that would readily become notorious to a reasonably competent underwriter working in the field […]”.

C.          Circumstances of the Disclosure

Assessing whether a material misrepresentation or non-disclosure has occurred is very much a fact-specific exercise. Determining whether a particular fact is material will often depend on factors such as what questions were posed on the insurer’s application forms, the instructions given by the insurer or its agents to the insured regarding the application, and whether the policy is new or a renewal (in which case a lower degree of disclosure is often required, since the insurer is already somewhat familiar with the risk.) Courts will typically assume that if an insurer wants to know about an aspect of a proposed risk, it will ask for such information; conversely, if the insurer chooses not to inquire about something, it is much less likely to be material.

Insureds might also be relieved from providing incorrect answers to questions that are ambiguous or are so specific as to suggest that additional or related information need not be disclosed. Poorly-worded applications or instructions might prevent an insurer from proving a fraudulent misrepresentation, if the insured can prove that he or she intended to answer properly but was confused or misled.

While a more in-depth discussion of this is beyond the scope of this paper, the point is that the particular circumstances surrounding the insurer obtaining the information from the insured must be assessed when determining whether a misrepresentation occurred or a material change in risk was not disclosed.


A.          General Background on Misrepresentations and Omissions

Misrepresentations, as circumscribed by statutory condition 1 under section 29 of the Insurance Act, are concerned with material information which was not disclosed prior to the creation of the insurance contract.

The term “misrepresentations” is in some ways misleading, as misrepresentations are typically divided into two sub-classes: misrepresentations and omissions. This is important because, as discussed further below, there are key differences between the two sub-classes.

In cases where an insured has proven that a claim or loss is within coverage under a policy, but the insurer alleges material misrepresentation, the onus is on the insurer to prove that:

1.   the insured misrepresented or failed to disclose facts within the insured’s knowledge;

2.   the misrepresentation was objectively material; and

3.   the misrepresentation induced the insurer to accept the risk at the stipulated premium.

The misrepresentation or omission need not actually relate to the loss that triggers the policy. Subject to specific statutory or policy wording, the question is whether the insured’s misrepresentations or omissions were material to the risk insured, not whether they were material to or causative of the particular loss or claim the insured later presents.

In Henwood, for example, the insured under a life insurance policy died in a motor vehicle accident, but the misrepresentations at issue related to an undisclosed “emotional disturbance” afflicting the insured which should have been disclosed in the application process. As the information regarding the undisclosed emotional disturbance was material, its non-disclosure permitted the insurer to void the policy, even though it had nothing to do with subsequent accident or the insured’s death.

B.          Distinction Between Misrepresentations and Omissions

As noted above, there are key differences between misrepresentations and omissions, which must be kept in mind when assessing how they apply to a given set of facts.

The core difference between misrepresentations and omissions is that, “misrepresentations are active in operation, whereas omissions are passive”. A misrepresentation is a “false representation of fact, an assertion that something is so when it is not, or that something is not so when it is”. Put another way, “[m]isrepresentations are words, writings or gestures that communicate misinformation and can be judged objectively by comparing them to the truth”.

An omission, however, is neither true nor false by itself. For an omission to be material, the person analyzing the information must draw an inference from it, and thereby be misled. Put another way, for an omission to mislead someone, the person reviewing the information on which the omission is based must draw an incorrect inference from the absence of information.

Unfortunately, as noted by the British Columbia Court of Appeal in Nagy v. BCAA Insurance Corporation, the distinction between misrepresentations and omissions is not always clear, particularly when the information at issue is a half-truth. As the Court noted, “distinguishing a misrepresentation from an omission becomes problematic where the statement is literally true, but practically false, and therefore misleading—not because of what it said but because of what it left unsaid”. Generally speaking, a partial statement of facts will be considered an omission. True but incomplete statements, so-called “half-truths”, these will typically constitute an omission within the meaning of statutory condition 1 of section 29 of the Insurance Act.

C.          Fraud and Omissions

The distinction between misrepresentations and omissions is also important for a very practical reason: material omissions are harder to prove. This is because British Columbia’s statutory condition 1 only applies when an insured “misrepresents or fraudulently omits material information – language mirrored in Alberta’s and Ontario’s statutory conditions.

As the Court of Appeal noted in Nagy, when a misrepresentation is at issue, “[t]he focus is on the understanding of the insurer, who will necessarily have been misled. That is why it matters not whether the misrepresentation was innocent or intentional”. But “[i]f the insured omits to communicate a material circumstance (an omission), however, that omission must not only be material, but also fraudulently made if it is to void the contract.”

As such, in British Columbia (and likely in Alberta and Ontario), an omission must be both material and fraudulent for the contract to be voided, while a misrepresentation need only be material.

This added element of fraud with respect to material omissions is a creature of the statutory regimes. At common law, fraudulent intent on the part of the insured was not required when assessing an alleged misrepresentation.

However, this raises a deeper question – what counts as “fraud”, for the purpose of the statutory condition? Does it require an intentional omission of facts that the insured knows would be material to the insurer, or merely an intention to deceive the insurer on something without knowing if the matter was important to the insurer?

Fraud in the context of a misrepresentation, rather than an omission, clearly falls in the latter camp. In Kruska v. Manufacturers Life Insurance Company, the court considered fraud “in a broad sense”, which encompassed “material misrepresentation or non-disclosure, even if made innocently and without fraudulent intention”, but then concluded that the statutory requirement is what is sometimes referred to as “actual fraud”:

[37]               The accepted test of actual fraud in a civil case derives from Derry v. Peek (1889), 14 App. Cas. 337 (H.L.). There must be a false representation, made knowingly, without belief in its truth, or recklessly, without care whether it is true or false. Nothing less than this will suffice for the defendant to succeed in this case. Conduct without fraudulent intent which, before the statute, might have been characterized as fraud will no longer so qualify. The effect of the statute is that the insured is still bound by her duty of utmost good faith until the incontestability clause takes effect. After that time she will be held covered if her material misrepresentation or non-disclosures were made innocently, or negligently. The incontestability clause protects her from false representations of that kind. But it will not protect her if she has the fraudulent mind described in Derry v. Peek. Then the law will deprive her, or her beneficiaries, of the proceeds of the contract.

However, where material omissions are concerned, it appears that “actual fraud” requires both knowing deception and that the withheld information would be material to the insurer. In Chenier et al. v. Madill Mercier et al. v. Plant & Anderson Ltd. et al., the court noted that fraud in the context of a “fraudulent omission” (as provided under Ontario’s statutory condition) meant “actual fraud” (as in Kruska), and that the statutory condition clearly required that the insured knew the fraud was material:

If Mrs. Chenier knew that an insurer might even hesitate to grant coverage if it knew of the mortgage foreclosure, the financial difficulties respecting the Carleton Place property, the tax and hydro arrears, the fact that she had defaulted upon a payment to C.A.F.O., and in general the financial predicament which she was in, and she omitted to communicate those circumstances, then she would have wilfully deprived the insurers of their opportunity to consider whether or not to accept this risk in the light of those circumstances. Then, obviously, she would have the “wicked mind” mentioned by Lord Esher. The circumstances which she omitted to communicate to the insurer were material to it. What troubles me is whether she knew that such circumstances were material, and indeed whether she ought to have known that they were material. I cannot think that she would be fraudulent if she honestly did not think that those circumstances were material or if she simply did not know that they were. When then would be the cheating, the wilful act to deprive another of what is rightfully his, or the wicked mind?

Considering then the words “fraudulently omits to communicate any circumstance that is material to be made known to the insurer in order to enable it to judge of the risk to be undertaken” contained in stat. con. 1, I am of the view that, in the absence of knowledge of the materiality to the insurer of the circumstances, there can be no fraud in the omission to communicate them. It is my opinion therefore, that unless I can come to the conclusion on the balance of probabilities that Mrs. Chenier knew that the circumstances she omitted to communicate to the insurer were material to it to judge of the risk to be undertaken, I cannot find that such omissions were fraudulent.

The language considered in Chenier, as set out in the emphasised section above, is the same as the language found in statutory condition 1, under section 29 of British Columbia’s current Insurance Act and the Ontario and Alberta equivalents.

The test articulated in Chenier is important because it confirms the phrase “fraudulently omits” in the statutory condition means that the insured who has made the omission must know that the omission was material. Put another way, the insured must know that, were the omitted information to be provided, the insurer might choose to decline to grant coverage or consider charging a higher premium.

This view is echoed by other authors who indicate that whether it is phrased as “fraudulently” (as in British Columbia’s Insurance Act, s. 29, statutory condition 1) or as “fraud” (as in section 53(3) of the same), “actual fraud” requires that, “[t]he insurer […] establish that the applicant (or the person whose life or well-being is insured [in the case of life insurance]) knew and appreciated the relevance of the facts misrepresented or omitted”. In either case, the insured must know that the deception was material to the risk insured if the insurer is to prove that an omission occurred.

Nevertheless, insurers might still argue that intentionally withholding material information without knowing if it would be material to the insurer constitutes a “fraudulent” omission. As noted above, Nagy distinguishes between misrepresentation and omission, but does not fully explore what constitutes a “fraudulent” omission. So when the Court states in passing that “[a]ny ‘omission’ that was calculated to mislead would presumably satisfy the requirement of fraud, and would void the policy”, without mentioning knowledge of materiality, an insurer might argue that “fraudulent” omission does not require knowledge of materiality. That said, the interpretation of the fraud requirement articulated in Chenier has been applied by Canadian courts on several occasions, and likely better reflects the wording of the statutory condition.

Interestingly, the fraud element and structure of statutory condition 1 is also relevant to the issue of material change in risk, as was recently discussed in Madam Justice Fleming’s decision in Schellenberg v Wawanesa Mutual Insurance Company.

Specifically, the requirement that the insured must know that that the information at issue is material to the risk insured when assessing omissions under statutory condition 1 has been used to interpret statutory condition 4 as requiring the same level of knowledge. The reasoning behind this is that, if this were not the case, an insured would be more protected before the insurance contract had been entered into, as this is when omissions occur, than he or she would be after the contract had been entered into, as this is when a material change in risk occurs. The argument is that it would be an odd situation for an insured to be more protected when providing information before a contract has been created than he or she is once the contract is in effect. This is discussed more fully in the next section.

Finally, with respect to the evidentiary burden that an insurer alleging an omission must meet, in British Columbia, the idea has persisted that an allegation of fraud carries with it a higher evidentiary burden and requires “heightened scrutiny”, particularly in motor vehicle insurance disputes, despite clear guidance from the Supreme Court of Canada in FH v McDougall that this is not the case and no special burden exists. This has been recognized by subsequent appellate decisions in British Columbia.


The common law obligation to disclose material information when applying for insurance does not extend to disclosing material changes in risk that arise after the insurance contract has been issued. The obligation to disclose changes in risk is imposed solely by statutory condition, by the policy itself, or both. An insurer seeking to rely on British Columbia’s statutory condition 4, must prove the following:

1.  A change material to the risk in fact occurred;

2.  The material change was within the insured’s control;

3.  The insured knew of the change; and

4.  The insured did not notify the insurer of the change promptly and in writing.

The first and last of these elements are straightforward – the first having already been discussed above in the section on materiality.

With respect to the second element, “control” was held to be “actual physical control” in Watkins v. Portage La Prairie Mut. Ins. Co. Watkins involved the ownership of an insured residence which was rented to a tenant who had a history of violence against the insured, the owner of the property, and who refused to vacate. The insured, believing that the tenant was going to vacate the residence and that she could move in, took out a policy of insurance which covered theft. The tenant at first refused to leave; he eventually moved out, but stole some property in the process.

The British Columbia Court of Appeal concluded that, at the time the insured took out the policy, she was the owner of the property, but she did not have control of the risk. On the facts, the insured had available to her the legal right to retake physical possession, but was unable to remove the violent tenant. Accordingly, the change was outside the insured’s control, and that part of the test was not met.

On the other hand, “control” does not require actual physical possession. In both Drechsler v Canadian Northern Shield Insurance Company and Davidson v. Wawanesa Insurance Company, the insureds owned the insured properties, but did not reside in or “possess” the properties. Yet they were still held to have “controlled” the properties as there was no evidence that either insured was prevented from accessing the insured property (unlike in Watkins). The insured in Davidson was held to “control” the property
even though his bail conditions prevented him from going within 100 meters of one of the properties’ occupants; the court observed that the insured could visit the property with a police escort or take proceedings to evict the occupant.

The third requirement, i.e., that the insured must know about the change, has proven far more problematic, specifically with respect to what the insured must know. Specifically, must he or she merely know about the change in circumstances, or must he or she know that the change would be material to the insurer?

Although Canadian courts have discussed this issue repeatedly, they have not ruled upon it definitively.

In Thomas v. Aviva Insurance Company of Canada, the insurer voided a property policy after the insured failed to disclose that he had installed a wood-burning stove, which the insurer contended was a material change in risk. The trial judge concluded that the insured had not known the change was material, and so could not be faulted for not disclosing it. The court of appeal dismissed the appeal, but on the basis that the insurer had not proven the change was material at all, and specifically declined to decide on whether the trial judge had interpreted the statutory condition correctly.

The issue was then extensively discussed in British Columbia in Schellenberg. The insurer in Schellenberg argued that the insureds ought to have disclosed that they had installed a marijuana grow operation on the property and had modified the property’s electrical system to accommodate it. The insureds replied that if they had known the changes were material to the insurer, they would have done so.

The trial judge observed that unlike statutory condition 1, statutory condition 4 does not require that a failure to disclose a material change be fraudulent; in effect, the literal wording of statutory condition 4 would impose a higher standard of disclosure for post-contract changes in risk than is required under statutory condition 1 before the formation of the contract. She further observed (at paras.93-95) that cases from other jurisdictions were split on the issue: Wolfe v. Western General Mutual Insurance suggested that no such requirement existed, and Violette v. Wawanesa Mutual Insurance Co. suggested that it did. Holding that statutory condition 4 is ambiguous (i.e., about whether an insured must know information is material), the trial judge suggested that the ambiguity should be construed in the insured’s favour.

However, on the evidence, the trial judge held the issue was moot because the insureds would not have disclosed their grow operation, even if they had known it was material, and neither the trial judge nor the appellate court determined the issue.

A similar non-result was also reached in Dubroy v Canadian Northern Shield Insurance Co., where the trial judge referred to this question as a “thorny and unresolved issue in British Columbia” – one he decided that he “need not weigh in on”.

Finally, even if knowledge of materiality is required, a trial judge is not bound to take an insured who claims ignorance of materiality at his or her word. As noted in Violette, “the trial judge in each case must assess the credibility of the claimed ignorance”.

In these circumstances, insurers can still reasonably argue that they are entitled to void policies where insureds fail to disclose material changes, even though the insured did not know the change is material. However, the reasoning and comments in the cases above suggests that such arguments would face an uphill battle; courts will in most cases more likely conclude that the insured must know that a change is material before a duty to disclose it arises.

With respect to the insurer’s recourse if the insured notifies it of material facts which constitute a change in the risk insured, the insurer then has access to the rights provided by virtue of the statutory or contractual provision(s). Typically, these provide the insurer with the option of either canceling the insurance contract and returning the unearned portion of the premium or proposing a new premium, as codified in British Columbia, Alberta and Ontario’s statutes.

If the insurer is not notified of the material change in risk, the insurance policy is voided from the point at which all of the above mentioned conditions are satisfied. It is important to note that, because the contract is voided and does not contemplate the insurer’s election to do so, no such communication is required from the insurer and the insurer does not choose the point from which the contract has been voided.

Also note that, under the British Columbia, Alberta and Ontario statutes, the material change in risk voids the contract “as to the part affected” by the change.

Finally, while the subject is beyond the scope of this paper, an insurer may have to pay insurance proceeds to a lender under a policy’s standard mortgage clause even though the applicable insurance policy has been voided. Where the equity in the property is sufficient security for the lender’s interest, the lender might choose not to seek payment.

If they do require payment from the insurer, the insurer’s remedy is a subrogated claim to recover the amounts paid.


While disputes surrounding misrepresentations and omissions of material information and failures to disclose material changes in the risk insured generate a significant amount of insurance coverage litigation, questions and uncertainties, both legal and practical remain.

British Columbian courts have recently released a number of decisions which help to clarify many aspects of how these statutory conditions operate; however, recent decisions have also highlighted both the practical difficulties that can arise, such as distinguishing between omissions and misrepresentations, and areas of continuing uncertainty, particularly with respect to the kind of knowledge an insured must have when an undisclosed material change in risk is said to have occurred.

While it remains to be seen how this knowledge question will ultimately be resolved, the fact that the academic commentary and some recent case authorities from across Canada favour an interpretation more favourable to the insured may well mean that this will ultimately be the interpretation reached by courts in British Columbia, Alberta and Ontario.

As such, insurers should proceed cautiously when voiding an insurance policy on the basis of a fraudulent omission or material change. In particular, awareness of the extent to which Canadian courts will scrutinize each aspect of the applicable legal tests when analysing a decision to void coverage on the basis of fraudulent omissions and material changes, especially with respect to the insured’s subjective knowledge of materiality, is advisable given the current state of the law.

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