The Supreme Court of Canada (the “SCC”) issued a decision dealing with coverage under a builders’ risk insurance policy that has important implications for owners, contractors and insurance companies. At issue was the interpretation of the exclusion of coverage for “the cost of making good faulty workmanship,” which appears in many commercial risks policies.
Following installation of windows at a high rise commercial tower, the window cleaning company hired by the owner to remove paint from the windows scratched and damaged the surfaces by using improper tools and methods. The owner submitted a claim for the costs to replace the damaged windows. The insurance company denied coverage relying on an exclusion in the policy precluding coverage for the “costs of making good faulty workmanship”. There was an exception to this exclusion that the owner relied upon. This exception provided that coverage would still be available for physical damage resulting from the faulty workmanship.
Read the full article here