Words Matter, Even When Absent: B.C. Appeal Court Confirms Unlimited Insurance For Construction Mitigation Expenses

• Published date: 07 March 2021
• Subject Matter: Insurance, Real Estate and Construction, Insurance Laws and Products, Construction & Planning
• Law Firm: Bennett Jones LLP
• Author: Ms Christine A. Viney, E. Bruce Mellett and Patrick Schembri

The British Columbia Court of Appeal recently held that a professional liability insurance policy provided potentially unlimited coverage, at least in respect of one area of coverage. In Surespan Structures Ltd. v Lloyds Underwriters, 2021 BCCA 65, the Court of Appeal found that the limits applicable to certain coverages available under the policy did not extend to loss mitigation coverage.

Background

This case arose out of a multi-party construction project concerning hospitals and associated parking structures on Vancouver Island. As part of the project, the Vancouver Island Health Authority contracted with THP Partnership, which then entered into a design services agreement with Graham Design Builders LP. The design services agreement required Graham to obtain professional liability insurance which covered consultants providing services to Graham. The policy in question was issued by members of Lloyds (the insurer). Amongst other things, this policy provided mitigation of loss coverage, which protects the insured against losses it incurs in fixing defects discovered during construction, which would result in claims against the policy if left unaddressed.

Graham entered into an agreement with Surespan Structures Ltd. under which Surespan was to design, supply, and install the precast concrete components for the parking structures. Surespan...