The Sky's The Limit: Inconsistent Policy Drafting Results In Unlimited Coverage

• Published date: 29 March 2021
• Subject Matter: Corporate/Commercial Law, Insurance, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Clark Wilson LLP
• Author: Mr Denny Chung

In Surespan Structures Ltd. v. Lloyds Underwriters, 2021 BCCA 65 ('Surespan'), the Court of Appeal held that there was no limit to a particular area of coverage, despite there being limits in other coverages.

In a multi-party construction project, Graham Design was subcontracted under a design-services agreement. Graham Design retained Surespan as their consultant for design, supply, and installation of certain precast concrete components. Graham Design took out a project specific professional liability policy which covered its consultants, including Surespan. The policy covered: (1) damages; (2) defence costs; (3) mitigation of loss coverage; and (4) supplementary payments (the 'Project Policy').

Surespan was called on to correct defects relating to load-bearing precast concrete structures supplied by Surespan (the 'Defects'). Surespan ended up incurring approximately $10 million for the repairs. Surespan sought mitigation of loss coverage under the Project Policy for the costs to...