Coverage for a “Dwelling” Includes Coverage for a Floor Made of Dirt
Motion by the insured for a declaration of coverage. The insured owned half of a duplex with a dirt floor. The question was whether the policy covered the cost of remediating the dirt floor after it had been contaminated with oil. The court held that remediation was covered under the policy as the definition of “dwelling” included the floor, albeit one made of dirt.
Insurance law – Homeowner’s insurance – Property insurance – Exclusions – Interpretation of policy – Coverage – Oil tanks – Contamination – Remediation – Contra proferentum rule – Floor – Definition
Snow v. Royal & Sun Alliance Insurance Co. of Canada,  N.S.J. No. 53, January 13, 2015, Nova Scotia Supreme Court, P.J. Murray J.
This was a motion by the insured for a declaration of coverage. The insured was the owner of half a duplex. The fuel tank from the neighbouring half duplex spilled onto the insured’s property and leaked into the soil beneath the insured’s home. The home subsequently experienced two fires and was ultimately torn down. The insured was unable to rebuild its home until the soil was remediated. The insurer denied coverage for the remediation.
The duplex had a crawl space and a dirt foundation, rather than a concrete slab. The policy defined “dwelling” as a building. The insurer argued that the plain and ordinary meaning of building did not include the soil. The insured argued that the policy covered all risks, unless specifically excluded, that the policy was ambiguous, and that finding coverage was the only interpretation which corresponded with the expectations of the parties.
The court held that the policy granted clear coverage for the escape of fuel oil. The question was to what that specified peril applied. The court held that the narrow view of “building” suggested by the insurer nullified the risk in the circumstances. Further, the court held that dwelling included a floor, albeit one made of dirt floor, and that the insured had therefore brought itself within coverage. Alternatively, the court found an ambiguity in the policy and construed the definition of dwelling in favour of the insured. In the further alternative, the court held that the nullification of coverage doctrine should apply as it was difficult to conceive of a case where the court would be justified in looking beyond the words in the policy, if not the circumstances of this case.
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