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You pay into an insurance policy for years, whether it’s disability life, or home insurance, to be on the safe side in case something happens. You trust that your insurer will come through for you if something does happen, but what if they don’t? What if you file a claim and your claim is denied?

It’s typical for insurance companies to deny or diminish insurance claims. While it helps their bottom line, it’s not always justified.

You may have a valid claim and if so, you can seek legal help to get the insurance payout to which you are entitled.

A case study

In Buchanan v. Wawanesa Mutual Insurance Company, a homeowner purchased an “all-risk” home insurance policy. When it was discovered that water was leaking from an underground public water main and the ongoing buildup of water caused cracks in the foundation and the interior of the home, the homeowner filed a claim. The cost to repair the home was estimated to be between $175,000 and $250,000. The claim was denied.

At issue were two specific clauses in the homeowners’ insurance policy.

  1. In making their claim, the homeowner relied on a clause that stated: “If the loss or damage is the result of the escape of water from a public water main, you are insured.”
  2. At the same time, in denying the claim, the insurance company relied on another clause which exempted coverage for settling, expansion, contraction, moving, bulging, buckling or cracking.

The clauses were apparently contradictory. One stated that the owner would be covered for any loss from the escape of water from a water main while the other seemed to suggest that the policy would not apply if the actual damage from the water loss caused issues with settling, bulging or cracking.

How the homeowner won the case

The B.C. Court of Appeal applies specific rules when interpreting insurance contracts. One such rule is the contra proferentum rule. This states that if a clause is ambiguous, it should be interpreted against the party that requested that clause to be included, usually the insurance company. Another is that contracts should be interpreted so that the parties’ original intentions are seen in the entire document.

In this case, the court ultimately held that a person who read this particular insurance policy would have reasonably assumed that they would be covered for any damage resulting from the escape of water from a public water main. The insurance company was therefore ordered to meet the claim they had denied initially and to pay for the homeowners’ repairs.

This case demonstrates the importance of reviewing your home insurance policy to see what is included and excluded to make sure you know what you are actually insured for.

If you make a claim which is then denied by your home insurer, there may be something in your contract that appears to be contradictory or ambiguous, which may help you reverse their denial of coverage.

If you are unsure of the wording of your contract or feel that the policy as written suggests you ought to have been covered, we can help.

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