When an insurance policy is drafted in clear and unequivocal
terms, courts must apply it with full force and refrain from
neutralizing its exclusions through the rules of contractual
interpretation.
In Emond v. Trillium Mutual
Insurance Co., the Supreme Court of Canada reaffirmed the
framework that governs the interpretation of insurance
contracts.
***
The insureds claimed compensation following the destruction of
their home by flooding. The insurer acknowledged that the loss was
covered but refused to pay the additional costs for rebuilding the
home in compliance with conservation authority requirements.
The policy set out an exclusion for “increased costs of
repair or replacement due to operation of any law regulating the
zoning, demolition, repair or construction,” except as
provided under certain additional coverages, including up to
$10,000 for compliance costs.
