October 10, 2024
Insurance policies cover fortuitous losses, but what does that mean?
Lalani Properties International Inc. v. Intact Insurance Company is a very long Ontario Court of Appeal decision, which we have read so you don’t have to.
One of the reasons it is so long is that it deals with multiple insurance coverage issues, mainly a wall collapse and a fire loss affecting the same building. The same owner sued the same insurer for both losses, with opposite results – the insurer was required to pay for the fire loss, but not the wall collapse.
Both are interesting to those of us who are law nerds, but we will focus on the wall collapse, where there was no coverage, because it is a cautionary tale for any property owner. The fire loss result is better news for property owners, as the Court upheld a favourable interpretation for the insured, based upon unique facts. This attitude is reassuring, but less instructional.
“Fortuitous” in broad terms means accidental or unforeseen (at the time the insurance was purchased). Whether a policy contains wording limiting coverage to fortuity or not, courts will apply this principle unless a foreseeable or intended act is expressly covered.
In more specific legal terms, the Court of Appeal accepts that in means that “the loss would not have occurred without an act or event that was not expected to occur in the ordinary course of things” (emphasis in original).
Another way to put it is that the property owner:
must first establish that the wall collapse would not have happened but for the occurrence of an unexpected intervening act such as “negligence, or adverse or unusual conditions without which the loss would not have occurred.
Though negligence is fortuitous, fortuity may in rare cases be found without negligence. The key is that the loss must be unexpected in the ordinary course.
The Court of Appeal agreed with the trial judge that the collapse of the wall was not fortuitous, but rather was due to causes which ought to be foreseeable, like water penetrating the wall. They did not consider the exclusions in the policy for losses due to wear and tear or gradual deterioration. The trial judge alternatively found that these exclusions applied. On the facts, this was a sensible result.
TAKEAWAYS
- Insurance policies are complex.
- Details matter.
- Facts matter.
- Applying facts to detailed documents is core work for lawyers.
- If you suffer a loss, or are sued, you should talk to a lawyer if in doubt about coverage- there are situations where coverage exists which might not be obvious.
WHAT WEILERS LLP CAN DO TO HELP YOU
Weilers LLP has throughout our 75 years represented insurers and insureds in insurance disputes. We know how to read and interpret a policy. We take a practical and assertive approach to resolving disputes, including trials when necessary. If you have a problem with your insurer, give us a call and see if we are the right lawyers for you.
We also continue to work for insurers when requested to do so, which improves our ability to navigate the claims and dispute resolution process.