March 13, 2025
Insurance policies are drafted by insurers.
THE ISSUE
Therefore, when a dispute arises over the interpretation of the policy, Ontario courts will often favour an interpretation which favours the insured.
When and why is this the case?
THE CASE
904950 Ontario Limited v. Dominion of Canada General Insurance Company is a recent example out of the Ontario Court of Appeal.
This case involved flooding in the insured’s basement caused by water from a watermain entering via a pipe that transected the basement wall.
The policy in question contained an exclusion clause which excluded the appellant from covering property damage caused by the discharge of water from watermains, if the water entered the property through basement walls.
The issue in the case was: did water entering through the pipe enter through the walls, since the pipe ran through the wall?
The insurer argued that the exclusion applied. The courts disagreed.
Once the insured establishes that the cause of the loss is within the coverage, the onus is shifts to the insurer to prove that an exclusion clause applies.
The courts found that the exclusion clause is ambiguous. This is frequently fatal to the insurer’s position, as ambiguities are typically decided in favour of the insured because the insurer is the party that decided on the wording of the policy.
As the Superior Court judge said when deciding the case in the first place, walls and pipes serve different purposes. Walls enclose and protect a property against the outside world. Pipes do the opposite.
If the pipe had been sealed, the result might have been different, but that was not the case here.
It helped the insured’s position that it could point to a case where the policy wording expressly excluded water entering through pipes. This showed that a reasonable insurer should consider that possibility when drafting the policy.
The insured won the case. If they had meekly accepted the denial, they would not have insurance coverage that they deserved.
TAKEAWAYS
- Insurance policies will be interpreted based upon the specific wording of the policy.
- That wording will be applied to the specific facts of the case.
- Ambiguities in the policy will usually be interpreted in favour of the insured.
WHAT WEILERS LLP CAN DO TO HELP YOU
At Weilers LLP, we have experience dealing with lawsuits of most sorts. We have experience reading insurance policies and know insurance law. If you have damage to your property, or are sued by someone else, we can give you the advice you need. If you require help dealing with your insurer, you may give us a call at Weilers LLP. We do not help you for free, but our fees are often a sound investment. If we cannot help you economically, we will let you know. We may be the right lawyers for you.