Come hell or “high-water”: What damage is covered by the Builder’s Risk policy?

On March 6, 2019, the Court of Appeal of Newfoundland and Labrador clarified the question of whether damage to property during a construction project is covered by the Builder’s Risk policy or the General Liability policy held by a contractor. The answer is; it depends. In Dominion of Canada General Insurance Company v Viking Fire Protection Inc.[1] the three-panel decision written by O’Brien J.A. poignantly begins with:

[w]hen water inadvertently escapes from a sprinkler system during construction, the law of gravity will determine its flow. The law of contract will determine whether the property which is damaged as a result of the flowing water is insured under a policy of insurance.

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