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All-risks policy excludes damages caused indirectly

In the matter of Wynward Insurance Group v. MS Developments Inc. 2015 BCSC 324 the court was asked to consider an all-risks insurance policy. Here, the respondents owned a licensed premises where, in 2013, heating tape around a drain pipe connected to a walk-in freezer failed, resulting in the freezing and eventual rupture of the drain pipe. The respondents were insured under an all-risks policy issued by Wynward Insurance Group. The policy at issue excluded coverage for loss or damage caused directly or indirectly by freezing. It also excluded coverage for loss caused by settling, expansion, moving, shifting or cracking. The court held that the physical act of freezing was an indirect cause of the damage to the respondent’s premises, and that coverage was thus excluded by the freezing exclusion in the policy. The court held that the term “directly” meant without intervening events, and that the respondent’s losses were not the direct result of the failure of the heat tape but an indirect result of a series of different events.

Case law summary by: Aharon Ittah