Court Of Appeal Dramatically Restricts Application Of "Delay" Exclusion In E&O Policy

In Hollowcore v. Visocchi¹, the Ontario Court of Appeal (ONCA) recently limited the application of a "delay" exclusion where damages awarded against the insured arose from two concurrent causes, notwithstanding that one of these causes was excluded from coverage. The damages in Hollowcore were caused by negligence and delay by the insured. The policy covered damages arising out of negligence claims, but excluded claims arising out of the insureds' failure to complete engineering drawings on time.

The Facts

In 1999, Hollowcore Incorporated and Prestressed Systems Inc. (PSI) hired Visco Engineering Inc. to prepare engineering drawings for an addition to an Ohio parking garage. There were a number of problems with the work submitted by Visco and its owner, Mr. Visocchi, who was a professional engineer. Many drawings had errors, were deficient or submitted late. These issues delayed construction and caused Hollowcore and PSI to incur back charges and other damages.