The Ontario Superior Court of Justice has applied a narrow interpretation of the coverage afforded by a builder's risk insurance policy, based on its analysis of the wording of the policy at issue.
In Pre-Eng v. Intact, 2019 ONSC 1700, the Ontario Superior Court considered whether losses caused by the negligent work of a builder hired to renovate the roof of an existing school, resulting in rain damage to the wooden floor of a gym below, were covered by an All Risk Builder's insurance policy (the "Builder's Risk Insurance"). It concluded that these damages were not covered as it adopted a narrow interpretation of the property insured. There was also a Commercial General Liability ("CGL") policy in place and the court described the two policies as “complementary”, despite the fact that a builder's risk insurance policy provides first-party coverage and a CGL policy covers third-party liability. The Court in Pre-Eng noted that builder's risk and CGL insurance served different purposes, with the purpose of builder's risk insurance being to ensure that a builder had sufficient insurance to repurchase new materials incorporated into a project and complete its work in the event of an unforeseen loss or failure. According to the Court, this purpose did not require a builder to "insure the entire structure before undertaking his small task."
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