All-risk property exclusion does not apply to all forms of settling: Alberta court

It is illogical to think the insurer of an all-risk property insurance policy would intend to exclude damage to a building resulting from any kind of “settling,” regardless of how that settling was caused, according to the Alberta Court of Appeal.
In Engle Estate v. Aviva Insurance Company, the plaintiff sued its all-risk property insurer for coverage for extensive damage caused to a condo building by excavation work being done on an adjoining property, Gary Zabos, partner with McDougall Gauley LLP said.
Zabos was speaking at the Canadian Defence Lawyers Annual Meeting & Conference, The Alchemy of Advocacy, in Toronto.
The insurer denied coverage, relying on an exclusion clause that said the policy did not insure against loss or damage “caused … by settling, expansion, contraction, etc.”
Aviva argued the wording in the exclusion clause referred to more than just natural settling, and therefore excluding any type of settling.
But the court said: “Why would the parties intend that damage resulting from an unnatural or fortuitous settlement be excluded under an ‘all-risk’ policy?”
The court concluded that “it is illogical to think that an insurer of an ‘all-risk’ policy would have intended to shield itself behind an exclusion if the accident produced settling, as opposed to any other type of damage.”