In life, everyone has their own values, but don't forget that in times of trouble, insurers have values proportional to the amount of their coverage.
A majority of homeowners consider their residence as part of their pension fund. So why neglect to insure it at replacement value?
Thus, a homeowner's residence, depreciated to a value of $250,000 and insured for the amount of $175,000, which is equivalent to 70% of its value, suffers damages amounting to $50,000. Given the insurer's refusal to compensate him for the full amount of his loss, the homeowner turns to
The court rules that even if the proportional indemnity clause is not included in the insurance policy, it must still apply.
The Civil Code of Quebec states that a contract that is "validly formed" obliges not only what it expresses but also everything that stems from it based on its nature, usage, and the law. If the court were to order the payment of full indemnity in the event of partial loss when there is underinsurance, it would go against the principle of "mutuality" inherent in the insurance contract.
The insurer, under the principle of proportional indemnity, is compelled to pay the amount of $35,000, which is 70% of the loss suffered by the homeowner.
In life, everyone has their own values, but don't forget that in times of misfortune, insurers have values proportional to the amount of their coverage.
*CA Quebec 200-09-006760-091
