General liability insurance policy does not respond to insured’s property damage
There are many types of insurance, each with a particular function. Add in other features such as additional insureds, and it is no wonder that a lay person gets confused when trying to interpret whether a policy responds to a loss. A good example is Skipper Properties Ltd. v. Zurich Insurance Company Ltd. 2015 BCSC 225. That case dealt with a self-represented plaintiff claiming that its property damage was covered by a policy to which it was an additional insured. Problem was: it was a liability policy.
The plaintiff’s misinterpretation was caused by a complicated matrix of facts which blurred the purpose of its insurance. The plaintiff’s neighbours were developing their commercial property. To do so, they entered into an agreement with the plaintiff to facilitate the development. Part of that agreement had the neighbour purchase wrap-up comprehensive general liability insurance, naming the plaintiff as an additional insured. Also as part of this agreement, the neighbours had to indemnify the plaintiff for loss or damage caused by the development.
When the plaintiff’s property was damaged, it looked to its insurer to cover the loss. The Court made it clear that covering the plaintiff’s property damage was not the role of the defendant liability insurer. The plaintiff could pursue the neighbours for the damage (which it had done), and if it obtained a judgment against the neighbours, the defendant might end up indemnifying the neighbours. Until that time, the plaintiff would have to rely on its own first party property insurance.
Case law update by: Christopher McDougall