Kallu v The Wawanesa Mutual Insurance Company, 2026 BCCA 385 is a straightforward reminder that property insurance depends on more than what caused the eventual loss. A change in the risk itself can matter before the fire, theft or other insured event ever happens.
The insureds had residential property insurance with Wawanesa. A marihuana grow operation was operating on the property and had not been disclosed to the insurer. A fire later damaged the property. Wawanesa denied coverage, and the dispute proceeded to trial.
The trial judge found that the grow operation was a material risk and that it had not been disclosed. That finding was important because property policies and the statutory insurance conditions in British Columbia require an insured to notify the insurer of a change that is material to the risk when the change is within the insured’s knowledge and control. The trial record also supported the conclusion that the insurer would have treated the property differently had it known about the operation.
On appeal, the insureds did not successfully disturb those core findings. The Court of Appeal’s official summary says the findings that the grow operation was a material risk and had not been disclosed were not challenged and were dispositive. The appeal was dismissed.
That makes the case useful for a reason that is easy to miss. The coverage problem did not depend on proving that the grow operation caused the fire. The material change issue concerns what the insurer agreed to insure and the risk it was asked to carry. Once the undisclosed change was found to be material, the coverage consequence followed from the disclosure condition rather than from a causal link between the change and the eventual fire.
For policyholders, that distinction matters whenever the use of property changes during a policy period. A home based business, major renovation, vacancy, commercial activity or another significant change may affect the risk even if it has nothing to do with the event that later produces a claim. Whether a particular change must be reported depends on the policy and the governing statutory conditions, but waiting until a loss occurs can leave the issue to be litigated after the fact.
For insurers, the case also shows why the evidence of materiality matters. It isn’t enough to label a change undesirable. The coverage position needs to be tied to the actual risk the insurer agreed to accept and, where relevant, to underwriting evidence showing that the undisclosed circumstance would have mattered.
The Court of Appeal did not need to rebuild the trial analysis from the ground up. The unchallenged materiality and nondisclosure findings already resolved the central insurance issue. That is what made the appeal fail.
Source note: Binder Insurance reviewed the Court of Appeal for British Columbia’s official judgment summary and corroborating analysis of the trial record. Automated access to the full appellate reasons was unavailable during this run.