Case Summary: R.C. Heating & Gasfitting Ltd. v. The Sovereign General Insurance Company

INSURANCE ISSUES

Where past negligence involved in the installation of the system manifested itself in an explosion years later, the "occurrence" or "accident" was held to have occurred at the time of the explosion, not at the time of the negligent installation, years after the policy period for the occurrence-based policy.

R.C. Heating & Gasfitting Ltd. v The Sovereign General Insurance Company, 2017 BCSC 1916 per Saunders, J. [4283]

FACTS AND ISSUES:

The insured, R.C. Heating & Gasfitting Ltd. ("RC Heating"), was in the business of installing gas systems during the time period of August 2001 to September 2007. In February and March, 2005, RC Heating installed a gas system at a property on Whitetail Lake in British Columbia (the "Property"). During this time, RC Heating held a third party liability policy (the "Policy") issued by Sovereign General insurance Company ("Sovereign General"). In 2007, RC Heating ceased operations and its Sovereign General policy was not renewed.

On August 13, 2014, an explosion occurred at the Property, resulting in serious bodily injuries to members of a family who were renting the Property at the time. An action was commenced and RC Heating was added as a party to the action.

RC Heating tendered the claim to Sovereign General, who refused to defend it on the basis that there had not been an "occurrence" during the policy period. RC Heating took the position that because the Policy was in place at the time of its alleged negligent acts, there had been an "occurrence" during the policy period.

The Policy provided coverage for "Bodily Injury or Property Damage caused by an occurrence". The term "occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions". The term "accident" was defined as "an unintended or unforeseen event which causes an injury or damage".

RC Heating brought an application seeking a declaration that Sovereign General had a duty to defend RC Heating against the allegations made in the civil claim and indemnity against expenses incurred in the defence of the same.

HELD: The Court found in favour of Sovereign General, determining that there was no duty to defend for lack of there being an "occurrence". The application was dismissed with costs to Sovereign General.

The Court held that the label given to a policy (e.g. "occurrence" or "claims made") is of little relevance in determining which type of policy it is. It is...