Part 32 published on 01/11/10
Insurer having duty to defend under commercial general liability policies
Four separate actions were brought against Progressive Homes Ltd. by the B.C. Housing Management Commission, concerning separate condominium projects built by Progressive. The actions alleged significant damage due to water penetration resulting from defects in the buildings’ envelopes.
Progressive argued that Lombard had a duty to defend the actions (on Progressive’s behalf) under various commercial general liability policies. The British Columbia Court of Appeal upheld the lower Court ruling that there was no coverage under the particular policies and no duty to defend. [See Condo Cases Across Canada Part 26 – May 2009]
Progressive appealed to the Supreme Court of Canada. The Supreme Court reversed the previous rulings and ordered Lombard to defend the actions. The Supreme Court’s decision included the following:
- Under the insurance policy, the term “property damage” did not necessarily mean property damage to third party property. It could include damage to the same property.
- An “accident” can include defective workmanship, and can also include “continuous or repeated exposure to conditions”.
- The “work performed” exclusion also did not necessarily apply.
- Since there was a possibility of coverage under the policy, the insurer had the duty to defend.