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Ontario judge rules Building Code different from by-law in home insurance exclusion


August 21, 2015   by Canadian Underwriter


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An Ontario court has ruled against Allstate Insurance Company of Canada over a disputed claim arising from a fire at an Ottawa home.

A court ruled against Allstate Insurance Company of Canada in a disputed claim over a home fire in Ottawa

Mohamed Choukair claimed the cost to replace his home, after a fire in January, 2014, was $450,700. Allstate, his insurer, only paid him $369,000, contending that the difference between the two amounts “relates to the increased cost of the rebuild associated with upgrades required” under Ontario’s Building Code, court records indicate.

In a decision released Wednesday, Mr. Justice Michael J. Quigley, of the Ontario Superior Court of Justice, stated Allstate “must pay for repairs and/or increased costs associated with Building Code upgrades.”

The policy that Allstate wrote for Choukair excluded “losses or increased costs of repair or cost of improving or upgrading dwellings or structures due to the operation of any by-law regulating the zoning, demolition, repair or construction of buildings and their related services.”

Justice Quigley agreed with Choukair, in that the wording of that exclusion “only addressed ‘by-laws’ and not ‘laws, acts or regulation.'”

Justice Quigley disagreed with Choukair’s argument that the Home Replacement Cost Guarantee, in the Allstate policy, requires the carrier to “pay for the loss in any event.”

That clause “guarantees that the costs of construction will be paid for by the insurer even if the construction costs exceed the policy limits,” Justice Quigley noted, but added he agrees with Allstate that the clause only affects policy limits and does not give the insured additional rights.

Allstate had argued that the provincial building code had been “adopted by reference” by the City of Ottawa in its by-laws, in order to ensure that building permits comply with the Code.

“If the Building Code requirements were taken out of the equation, there were no increased costs imposed by the by-law itself,” Justice Quigley wrote. “It cannot be said that any of the increased costs of repair are ‘due to the operation of any by-law regulating the zoning, demolition, repair or construction of buildings and their related services.’ The increased cost of repair is due to the requirements of the Building Code.”


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