The Ontario Court of Appeal (ONCA) has released a decision that reiterates a key guiding principle in proceedings brought to enforce an insurer's duty to defend: the court must carefully review the underlying pleading and focus on the true nature of the claim, not simply the words used by the plaintiff in the underlying claim, to determine whether any of the claims could potentially be covered by the policy. The ONCA overturned a lower court judge who the court stated had failed to properly conduct this analysis.
The Ontario Insurance Act requires that every property insurance contract in the province gives the parties a right to require that disagreements about the amount of an insured loss be resolved via an appraisal process. However, the principles applicable to appraisals are often not well understood. A recent case seems to be the latest example of this and is necessary reading for any insured thinking about invoking an appraisal.
Insurance applications can be challenging but being diligent is important as an insurer may deny coverage of a claim if an insured incorrectly answered a question or failed to disclose material information. On the other hand, insureds should be aware that the courts will scrutinise claims of inadequate disclosure on a reasonableness basis.
The Alberta Court of Appeal recently addressed a recurring coverage issue: the conflict between the broad protection intended by an 'all perils' property insurance policy and an exclusion for the costs of making good faulty workmanship. Based in part on the general purpose of such insurance, the decision held that property damage directly caused by the faulty workmanship of a contractor was covered, as long as it was outside the scope of work for which the contractor had been hired.
The Alberta Court of Appeal has ordered an insurer to defend claims made against its insured's cold storage business, which was sued when its warehouse thawed and damaged its customer's food products. This case illustrates that it is important to always review a policy's specific words to determine what it covers rather than rely on received wisdom about what a policy typically covers.