ONSC finds no property coverage for resulting damage from faulty workmanship

Monk v. Farmers’ Mutual Insurance Co. (Lindsay), [2014] O.J. No. 3509, illustrates the importance of the policy language used.

Ontario Superior Court Justice Koke summarily dismissed this action against both the insurer and insurance broker arising from an insurance coverage claim for property damage to a log home owned by the plaintiff in Bracebridge, Ontario. The damage was allegedly caused by the negligent workmanship of Pleasantview Log Restoration Systems (“Pleasantview”), a contractor retained by the plaintiff to perform restoration work on the premises, and was made under a standard homeowner’s policy issued by Farmers’ and arranged by Muskoka Insurance.

His Honour accepted Farmers’ position, upon which Muskoka relied, that the plaintiff’s claim constituted the costs of repairing faulty workmanship caused by Pleasantview, which is specifically excluded by the policy. He held that under the property coverage found in the subject policy, “resulting damage” is not covered. The insured cited other wordings where there is an exception for resulting damage and asked the court to infer this was also the case here, which His Honour refused to do, while noting that “most” homeowner’s policies have the exception for “resulting damage”. And, he held that an exception for “resulting damage” in the “property excluded” exclusion did not trump the effect of the “faulty workmanship” exclusion. Given those findings, he did not address the limitation period issue also raised by the insurer.

In respect of the claim against the broker, His Honour held that the nature of the claim against it is “such that if there is no primary insurance coverage, there can be no damages flowing from any breach of Muskoka Insurance’s contractual and fiduciary duty to the plaintiff”.