Contractor Consistency: The Scope Of A Contractor's Work And All-Risk Policies

Published date15 December 2020
Subject MatterInsurance, Real Estate and Construction, Insurance Laws and Products, Real Estate
Law FirmClark Wilson LLP
AuthorMr Satinder Sidhu and Denny Chung

Condominium Corporation No. 9312374 v. Aviva Insurance Company of Canada, 2020 ABCA 166 ("Condo Corp. 931") reminds owners and contractors what is and is not typically covered with respect to a contractor's work under an all-risk property insurance policy.

In the course of a construction remediation project, the plaintiff condominium made a claim under the corporation's all-risk property policy in relation to damage caused by one of their contractors. The Alberta Court of Appeal concluded that the policy did not cover the cost to redo the contractor's work for which they were hired, but the resulting damage caused by the contractor's work was covered.

Following the Supreme Court of Canada's decision in Ledcor v. Northbridge[1], the Court of Appeal reiterated that the scope of a contractor's work will typically dictate what is not covered by all-risk insurance, and correspondingly what is covered.


The Condominium Corporation retained a contractor to repair the building membrane of their parkade. The contractor's scope of work specifically called for cutting into the surface of the parkade. Otherwise, it was made clear that the contactor's cutting should not extend past the surface into any actual structure of the concrete slab.

While cutting into the surface, the contractor cut too deep and struck the concrete slab. This resulted in damage to the structural integrity of the parkade.

The Condominium Corporation applied for insurance coverage for the property damage under their all-risk property policy. The policy contained the commonly found clause which excluded coverage for the cost of making good faulty or improper workmanship. The policy also contained the common exception to this exclusion - providing coverage for any damage caused directly by a resultant risk not otherwise excluded.

The Condominium Corporation's insurer denied coverage on the basis that the policy excluded the damage claimed for - the damage was caused by the contractor cutting too deep into the concrete slab when they were not supposed to. This was faulty workmanship, according to the insurer, and therefore not covered by the all-risk property policy.

On summary application to a Master, coverage was found for the Condominium Corporation. However, on appeal to the Court of Queen's Bench, the Chambers Judge reversed the original finding and agreed with the insurer. The Chambers Judge found that the structural damage to the concrete slab was part of the contractor's faulty...

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