In an unusual case revolving around this principle, Zahid Shah, a Brampton man who was sued by the buyers of his home for withholding that information, hoped his insurance company would help him pay to defend the suit. Shah was planning to rely on a clause in most home insurance policies that says the insurer will pay if a court finds the policyholder must pay damages because of unintentional injury to a person or to the property.
The judge disagreed. In a decision dated March 18, 2013, Justice Deena Baltman found that since all of the allegations against Shah were based on fraudulent misrepresentations, they were not covered by the policy. The claims not only were about lying, but that the sellers also actively concealed the fire damage so that it would not be noticed by the buyers, agents and home inspectors.
Sellers often try to cover up problems such as fire or water damage that’s been repaired. As this case shows, Sellers would be better to just disclose what happened so they can sleep at night.