A negligence claim alleging that a British Columbia insurance agent ignored a rezoning notification and left a property underinsured for years has been dismissed by the Supreme Court of British Columbia. In a decision rendered September 25, 2026, the court found that Kulwinder Kaur Sanghera had failed to establish negligence on the part of Gold Key Insurance Services Ltd.

Commercial use, residential insurance

In 2006, insurance agent Sukhdarshan Sandhu of Gold Key Insurance Services Ltd. arranged residential rental property coverage through Wawanesa Mutual Insurance Company for a property owned by Kulwinder Kaur Sanghera and Jagjit Sanghera in Coquitlam, British Columbia.

Later that year, the property was rezoned for commercial use, and an automotive repair shop began leasing it in 2007. Despite the change, the property remained insured as a residential dwelling until a fire in 2014. Annual renewals continued to identify it as a "Basic Dwelling."

On March 4, 2014, a fire destroyed most of the building. At the time, the auto shop was experiencing financial difficulties and had not paid rent for a few months. By letter of March 21, 2014, Wawanesa denied coverage due to the undisclosed change to commercial tenancy. Six days later, it voided the combined policy for the Sanghera’s rental property and the newly rezoned property retroactive to approximately March 1, 2007, and returned premiums paid since March 2007 totalling $11,445.

The owners claimed the absence of insurance coverage resulted in a reduction of approximately $90,000 to $100,000 in the property's sale price, along with lost rental income.

In February 2024, Ms. Sanghera consented to the dismissal of her claim against Wawanesa.

Property owners blame their insurance agent

The Sangheras maintained that they had informed Sandhu of the property's rezoning and commercial tenancy. They also argued that the change in use should have been apparent to him when visiting a nearby business, and that he should have inquired about changes during annual policy renewals.

Gold Key denied that Sandhu had been informed of the change in use and disputed both the alleged breach of duty and the financial losses claimed by the owners.

Court questions owners' testimony

The court found the owners' testimony inconsistent and unreliable, concluding that they had not established that Sandhu had been informed of the property's change in use. It considered it unlikely that an insurance agent would knowingly leave the property insured under an inappropriate policy for years without acting.

The court also noted that Sanghera, an experienced property owner, had received renewal documents showing that the coverage remained residential and had never followed up to obtain commercial coverage.

The court also rejected the argument that Sandhu should have noticed the change in use when passing the property. Photographs showed that the building still resembled a residential home.

As for the allegation that Sandhu should have inspected the property or inquired about changes during annual renewals, the court noted that these duties had not been properly raised in the claim. Establishing such obligations would also have required expert evidence on the standard of care expected of an insurance representative.

The claim also failed because the owners had not established their financial losses. The court found their testimony regarding the reduction in sale price and lost rental income insufficiently precise and noted that they had failed to produce supporting documents, including the property sale agreement and rental records.