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QA Insurance Claim by a Lot Owner

insurance-claim-lot-owner-1

Question: If a lot owner makes an insurance claim that affects the premium and that lot owner pays a higher portion, what happens when the lot owner leaves? Does the higher premium fall to the next owner of the lot?

Answer: My instinct would be that the purchaser doesn’t inherit that.

That is a spectacularly good question that legislature didn’t think over, nor did I. Excesses relate to a specific claim. So if they’re sort of ‘one offs’, whereas premiums, once they’re increased, probably stay increased. My instinct would be that the purchaser doesn’t inherit that. For liability to run with a lot and to survive transfers, you need the express statement, I think, to that effect, whereas the language of the section we looked at talks about a lot owner causing that increase.

That is an individual person, it doesn’t talk about a lot owner or its successes in title. So it seems to me that what it really implies is that a lot owner, so long as they are, and probably by that definition, they have to be a lot owner for the section to apply to them. If they’re no longer a lot owner. They don’t. I don’t think the purchaser inherits liability, because the section doesn’t say so and the section does seem to put it on the specific person that caused it.

This is a fantastic question. I think where you end up is, that lot owner as the burden of the increase for the currency of their ownership, but upon disposition of the lot, the excess doesn’t change, but the OC picks it up. I think that has to be the answer based on what’s written but it was obviously not something that was considered discreetly.

Tim Graham
Bugden Allen Graham Lawyers

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