Covenants to insure can bar action against other named insureds

In a short decision, Jacobs v. Leboeuf Properties Inc., 2018 ONSC 4795, the Ontario Superior Court of Justice dismissed an Owner’s claim against a General Contractor on the basis that the Owner’s contractual obligation to obtain insurance for the project and include the General Contractor as named insured (the covenant to insure) relieved the General Contractor from liability for faulty workmanship.

The Owner alleged that the General Contractor negligently, and in breach of the contract between the parties, performed work that caused damage to project property. The Owner sought to recover from the General Contractor the cost to correct and complete the allegedly negligent work.

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A reminder from the BC Supreme Court that in the absence of ambiguity, courts will give effect to the ordinary meaning of insurance policy language

In a recent decision, Surespan Structures Ltd. v. Lloyd’s Underwriters, 2018 BCSC 1058, the British Columbia Supreme Court (the “Court”) had to determine whether a Design-Builder and an Engineer were “Insureds” for the purposes of a project-specific professional liability insurance policy. This is an important decision for insurers, insureds and professionals providing coverage advice, as the Court provided a comprehensive and detailed summary of the law on the interpretation of insurance policy contracts.

Background

The Design-Builder and Engineer sought a declaration that they were Insureds under a project-specific professional liability insurance policy that had been obtained by a third party, the Registered Professional of Record for the Project.

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