Insurance

Supreme Court Limits “Cost Of Making Good” Exclusion, But Leaves Residual Uncertainty

The Supreme Court of Canada has released its much-anticipated decision in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. The case is notable in three ways. First, it continues a trend of the Court bringing real commercial sense to the interpretation of insurance policies. Second, it restricts the scope of the faulty workmanship exclusion to the actual cost of redoing the work. Third, it unfortunately provides unnecessary commentary that may result in some ongoing uncertainty, particularly in the area of faulty design. Read More
Insurance

Carneiro v. Durham: The Independent Rights Of An Additional Insured

In Carneiro v. Durham (Regional Municipality) 1, the Ontario Court of Appeal recently had the opportunity to consider the bundle of rights afforded to a municipality, named as an additional under a contractor's liability policy. The Court held that the municipality had independent rights under the policy, including a right to a defence, regardless of the defence provided to the named insured. Read More
Insurance

Is That “Faulty Workmanship” Exclusion Watertight? ONCA Finds That Insurer Cannot Exclude Resulting Damage By Implication

Many all-risks insurance policies exclude damage caused by a contractor's faulty workmanship. The breadth of these "faulty workmanship" exclusions vary considerably. On one hand, a clause may narrowly exclude only the "cost of making good" the contractor's defective work. On the other hand, a clause may exclude not only the cost of correcting the fault, but any damage caused as a result of the work performed. Such damage is commonly known as "resulting damage". The Ontario Court of Appeal recently held that an insurer cannot exclude resulting damage by implication. Where a "faulty workmanship" clause is silent on resulting damage, such damage will remain covered. Read More
Commercial LitigationInsurance

Ontario Court Of Appeal: Reasonable Apprehension Of Conflict Forces Insurer To Relinquish Control Of Defence

The Ontario Court of Appeal has again confirmed that an insurer's contractual right to control a defence must yield to the interests of its insured where its coverage position creates a reasonable apprehension that defence counsel would be in a conflict of interest. In Hoang v. Vicentini, the Ontario Court of Appeal ordered an insurer to relinquish control over the defence of its insured and pay for the insured's independent counsel. The Court confirmed that if a fact affecting your coverage is disputed in the underlying litigation, a conflict of interest arises. Read More
Commercial LitigationInsurance

Judge Confirms Limited Use Of Extrinsic Evidence For Duty To Defend

An insurer's duty to defend an action against its insured is triggered by the mere possibility that a claim could be made under the insured's policy. Traditionally, a court's analysis of whether this duty is triggered is based solely on the pleadings. However, in some limited circumstances the courts have permitted a consideration of "non-controversial" evidence. A recent decision of the Ontario Superior Court provides a good illustration of when such extrinsic evidence is and is not appropriate. While higher authorities have opened the door to extrinsic evidence, the court stops short of permitting insurers to engage in adversarial fact-finding inquiries. Read More
Commercial LitigationInsurance

B.C. Court Of Appeal Finds Costs To Remedy Damage Caused By Defective Workmanship Is Not Excluded By Workmanship/Design Exclusion

The British Columbia Court of Appeal recently confirmed in Acciona Infrastructure Canada Inc. v. Allianz Global Risks US Insurance Co. that a Workmanship/Design Exclusion does not exclude the costs to remedy damage caused by defective workmanship. The lower court decision was previously reported on in Covered. Acciona is the first case in Canada to consider the LEG 2/96, "Defects Exclusion" clause used in Course of Construction ("COC") policies in Canada. While the outcome of this appeal decision is definitely pro-insured, the lasting impact of this decision will depend on whether the court's reasoning is restricted to the unique facts of this case or applied more broadly to resulting damage claims generally. Read More
Insurance

Bullies And Their Parents Not Covered For Lawsuits Under Home Insurance Policy

In Unifund Assurance Company v. D.E., the Ontario Court of Appeal ruled that the parents of a school-age bully are not covered for their negligent supervision under their home insurance policy. We recently reported on D.E. v. Unifund Assurance Company, a trial level decision where the Court declared that an insurer, Unifund, had to defend and indemnify parents of an alleged school-age bully. The decision was overturned and the Court of Appeal's reasoning is precedent-setting and instructive to both insurers and policy holders. Read More
Commercial LitigationInsurance

Carefully Consider That Additional Insured Endorsement – It May Still Protect You!

The Ontario Superior Court of Justice recently held that an additional insured was covered by a policy, where there was no direct claim against the named insured, even though the coverage was limited to claims arising from the negligence of the named insured. The most common additional insured endorsements are generally speaking very restrictive in their application. As this case demonstrates, such an endorsement may still provide protection to an additional insured even where the plaintiff has no direct claim against the named insured. Read More
Insurance

Insurance Clauses: Priceless Or Worthless?

Contracts provide an ideal opportunity for the efficient allocation of risk, and insurance clauses can cover much of this ground, often with no concessions from your client. This opportunity can be lost when the clause does not really fit the particular transaction, or where the coverage is not available when later required. Even a carefully drafted clause may be worthless, if the parties do not turn their minds to how it will apply to the specific circumstances and avoid some common traps, as discussed below. For a more thorough discussion, please sign up for our upcoming CBA webinar "Negotiating and Drafting Effective Risk Allocation: Integrated Liability and Insurance Clauses" (Fall 2015). Read More