Case information

Insurance — Homeowner’s insurance — Home deemed total loss as a result of flooding — Home insured through standard form residential homeowners’ insurance policy including endorsement for guaranteed rebuilding cost — Policy containing exclusion for increased costs of replacement due to operation of any law regulating construction of buildings — Insurer disputing homeowners’ claim for coverage for costs of complying with regulatory policies to rebuild home — Application judge concluding coverage included and Court of Appeal concluding coverage excluded — What is the correct interpretation of the guaranteed rebuilding cost endorsement? — Whether an exclusion clause in the basic policy can be used to deny expanded coverage granted by the guaranteed rebuilding cost endorsement.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Stephen and Claudette Emond lived in a home on the Ottawa River that was located in the catchment area of the Mississippi Valley Conservation Authority (“MVCA”). They had purchased a standard form residential homeowners’ insurance policy from Trillium Mutual Insurance Company. The Emonds’ home was deemed a total loss as a result of flooding in April 2019. Although the insurer acknowledged coverage for the loss under the policy, the parties could not agree on what, if any, costs of replacement of the insureds’ home were excluded from coverage under the policy. The Emonds claimed that the Guaranteed Rebuilding Cost (“GRC”) coverage endorsement fully guaranteed their rebuilding costs. Trillium acknowledged that the GRC coverage applied to replace the insureds’ home, but took the position that the costs to be incurred to comply with the MVCA’s regulation policies and other by-laws and regulations enacted after the original building of the home were excluded from coverage by an exclusion in the policy. The application judge accepted the Emonds’ position that the GRC coverage was intended to guarantee the costs of rebuilding their home, without any limitation of coverage resulting from the operation of any rule, regulation, by-law, or ordinance. The Ontario Court of Appeal allowed the insurer’s appeal and concluded that the exclusion applied to exclude coverage for increased costs to comply with any law, including by-laws and regulations such as the MVCA regulation policies.