A property sale would have transformed their lives, but N.S. family got an epic shock instead

As Sarah Ryall and her husband counted down the days before their rental property officially sold, the Lower Argyle, N.S., couple started to breathe a sigh of relief.

The couple had owned the Cole Harbour, N.S., home for almost two decades. With no pension plans or mutual funds between them, selling the rental property was a key piece of financial security that would allow Sarah Ryall to continue being a stay-at-home mom to their nine children. It would also allow husband Tanner Ryall to spend lots of time with the kids, who range in age from almost four to 20.

But on a Sunday morning in mid-February, Sarah Ryall got a call from a longtime friend who was managing the rental property before its sale.

"All I could hear was, 'Oh my God! Oh my God! Oh my God!'" she recalled. "'There's water everywhere.'"

The horror of the moment was soon surpassed when the family learned that because of an insurance concept known as a change in material risk, it looked like they'd be on the hook for almost $100,000 in repair bills.

"To have this situation was just shocking, absolutely shocking," said Sarah Ryall.

When Ryall first learned of the damage to the home, friend and contractor Tom Arnold was on the other end of the phone call. When he arrived at the house, he noticed steam coming out from the crevices of the front door. Inside, he was met with a wall of steam and a pool of water on the floor.

"The steam that was in here … you couldn't see a thing," said Arnold.

Three copper water pipes that carry scalding water to the home's radiators had burst, causing water to leak and travel to wherever gravity would take it. But the hot water itself turned the home into a giant steam room.

The family's insurer, Co-operators, was called. Crews armed with dehumidifiers and vacuums were called in to mitigate the damage. The Ryalls were told that besides the thousands in dollars for the cleanup efforts, it was going to cost around $90,000 to repair the damage — and they soon learned their insurance wasn't going to cover it.

Why the claim was initially denied

The Ryalls said the reason they were given was because the home had been vacant for more than five days.

In the eyes of insurers, Arnold's daily inspections, visits from tradespeople who did work such as painting the walls and installing new flooring in the basement, and frequent visits from real estate agents and potential homebuyers did not mean the home was occupied.

Amanda Dean, Atlantic vice-president for the Insurance Bureau of Canada, said it's important to notify insurers about any changes in material risk, be it a home renovation, an extended trip away or a home that's no longer occupied and on the market for sale.

She said insurers will discuss preventive measures the client can take to ensure there are no gaps in coverage should something go wrong.

"Every claim situation is different," said Dean. "There's always a whole host of circumstances that lead up to an event occurring where somebody has to make a claim, so that's going to involve a big conversation between, typically, the adjuster and the homeowner.

"There's a lot of details, a lot of conversation that needs to be had, but it all comes back to that contract between the insurance company and the homeowner."

Where consumers can turn

Dean said if a homeowner isn't satisfied with the insurer's response, all insurers have an independent ombudsperson. There's also one more escalation step, to the General Insurance OmbudService of Canada.

After CBC News contacted Co-operators, the Ryalls received a call from a company executive who told them Co-operators would cover the damages.

The company later said the timing of the call and settlement was entirely coincidental as the claims process was ongoing.

"It was a huge weight taken off of our shoulders and we are so thankful to the Co-operators for working with us now to make sure that we can get these repairs done to our home and restore it to the condition that it was in before this happened," said Sarah Ryall.

In a statement, the company acknowledged how challenging this situation was for its client and was pleased it has been resolved.

"We'd like to remind consumers of the importance of reviewing your insurance policies and notifying your insurance company if there are any changes required to ensure you have the coverage you need," it said.

For now, the Ryalls' rental property remains off the market until the repairs are carried out.

Ryall's hope

Sarah Ryall said she wants other people to know about potential limitations in insurance coverage. She said she's heard from lots of friends who were unaware of the issues they could face with water damage and the vacancy of a home.

"Even if this just helps one other person out there to not have to face what we've faced over the last couple of weeks, this will be well worth it," she said.