Condominum policy insuring against damage to common property and units within the building covers water damage necessitating repairs to interior surfaces of unit such as paint and flooring

Insurance law – Property insurance – Policies and insurance contracts – Strata corporations – Bylaws – Adjacent units – Unit – definition – Interpretation of policy – Statutory provisions – Exclusions

Alberta Residential Corp. v. Certain Lloyd’s Underwriters Subscribing to Authority Agreement no. YF091589, [2015] A.J. No. 618, 2015 ABCA 195, Alberta Court of Appeal, June 5, 2015, R.L. Berger, J.D.B. McDonald and R.S. Brown JJ.A.

The appellant insured the respondent against all risks of direct physical loss or damage to the insureds’ condominium including damage to the common property and to units within the building. When water pipes burst in one unit, the adjacent unit sustained water damage necessitating repairs to and replacement of drywall from the walls and ceiling, and the removal and replacement of damaged flooring and subfloor. The insured claimed under the policy and the insurer responded that its policy did not cover repair beyond the unfinished interior surface of the walls, ceiling and floor. The question at the trial court and before the Court of Appeal was whether the insurance policy provided coverage for repairs beyond the unfinished interior surfaces of the floors, walls and ceilings of the unit such as paint and flooring.

The Court of Appeal affirmed the decision of the chambers judge who answered the question in the affirmative. The chambers judge rejected the insurer’s argument that the boundary of the unit and the unit were synonymous for insurance purposes. The chambers judge noted that it would be impossible for anyone to occupy the unit were it confined to the boundary. He also suggested that such a reading would be inconsistent with the Condominium Property Act, RSA 2000, c.C-22 because s.9 of the act provides that the boundary forms part of the unit and s. 1(y)(i) defines a unit as “space” which is three dimensional while the undecorated two dimensional plane identified by the insurer as the unit could not reasonably be understood as “space”. In the result the appeal was dismissed.

This case was digested by Cameron B. Elder and edited by David Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at or or review their biographies at

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