The Applicant, Choukair, had
a Homeowner’s Policy with the respondent, Allstate. On January 20, 2014 there
was a total loss fire at Choukair’s residence. As a result, the house had to be
rebuilt. Choukair stated that his replacement cost was $450,700.00, plus taxes.
Allstate paid Choukair $369,000.00 but refused to pay the balance.
The difference between what Choukair
claimed and what Allstate paid related to the increased cost of the rebuild
associated with upgrades required as a result of the Building Code, which Allstate stated were excluded by the Insurance
Policy.
There was an exclusion clause
in the Policy which stated the following:
We do not insure: (5) losses or
increased costs of repair or cost of improving or upgrading dwellings or
structures due to the operation of
any by-law regulating the zoning, demolition, repair or construction of
buildings and their related services;
Justice Quigley held that the loss did not result from the operation of
a by-law. The increased costs were related to the application
of the Building Code, which is
categorized as a law and not a by-law.
Allstate therefore
had to pay the balance related to increased costs associated with the Building Code upgrades. Insurers may want to consider the wording of their exclusion clauses as a result.
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