Insured operating cold storage business entitled to defence with respect to claim by customer for damages arising from loss of products

12. February 2019 0

Insurance law – Commercial general liability insurance – Exclusions – Duty to defend – Practice – Appeals

Intact Insurance Co. v. Clauson Cold & Cooler Ltd., [2018] A.J. No. 1470, 2018 ABQB 997, Alberta Court of Queen’s Bench, December 7, 2018, N. Dilts J.

The Alberta Court of Queen’s Bench heard an appeal by the insurer from the decision of a Master which granted the application of the insured seeking, among other things, a declaration that the insurer’s duty to defend the insured was triggered by actions against the insured.

The insured purchased a policy from the insurer for its cold storage warehouse business. The insured had a single policy of insurance with multiple forms, riders and endorsements. The policy included a Warehouse form, an Equipment Breakdown Coverage – Standard Comprehensive form, an Equipment Breakdown Coverage – Consequential Damage form, and a Commercial General Liability form.

The insured was sued for loss of certain products while these products were in the care, custody and control of the insured. The plaintiffs brought claims of negligence and breach of contract when their frozen goods thawed and were damaged.

The insurer denied a duty to defend on the basis that the Equipment Breakdown Coverage forms were first party insurance and the Warehouse form contained an exclusion for loss or damage caused by or resulting from extremes or changes of temperature.

The court concluded the insurer had a duty to defend the insured in the actions given (1) the Equipment Breakdown Coverage – Consequential Damage form extended coverage for the insured’s liability to third parties for loss of products under refrigeration due to spoilage when the loss arises solely from an accident; (2) the defence provision contained in the commercial general liability form applies to the entire policy; (3) and the allegations of the plaintiffs on their face, if assumed to be true, could give rise to a claim under the policy. Accordingly, the appeal of the Master’s decision was dismissed.

This case was digested by Cameron B. Elder, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Cameron B. Elder at

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