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Sovereign General Insurance ordered to pay its half of $2.3-million policy


January 9, 2008   by Canadian Underwriter


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The B.C. Supreme Court ordered Sovereign General Insurance in December to pay its half of a Cdn$2.3-million policy to a couple who lost their multi-million dollar wine collection due to a sewer back-up, according to Canadian Press.
A rare and expensive wine collection containing more than 8,000 bottles owned by Ralph and Diane Wells including 50 cases of Chateaux Mouton Rothschild, dating from 1945 to 1995 was ruined after a municipal sewer back up on Oct.16, 2003.
The couple made a claim under their homeowners’ insurance policy, which was underwritten 50% by Canadian Northern Shield Insurance and 50% by Sovereign General Insurance.
The insurers refused to cover the loss and the Wells initiated action against the two companies.
Sovereign claimed it was not liable to pay, arguing before court that it had never been informed of the value of the collection.
But B.C. Supreme Court Justice William Ehrcke noted Sovereign never asked the total value of the content; in addition, the judge noted, the insurer had been informed of the wine collection, according to Canadian Press.
“Sovereign’s failure to ask for any more information, having thus been put on inquiry, must be taken as waiver of any obligation on the plaintiff to specify a value for the wine collection,” he writes in his ruling.
He ruled Sovereign was not entitled to void its participation the policy in this case and was not entitled to refuse indemnity.