Today, the Supreme Court of Canada (the “SCC”)
issued a
decision dealing with coverage under a builders’ risk
insurance policy that has important implications for owners,
contractors and insurance companies. At issue was the
interpretation of the exclusion of coverage for “the cost of
making good faulty workmanship,” which appears in many
commercial risks policies.
Following installation of windows at a highrise commercial
tower, the window cleaning company hired by the owner to remove
paint from the windows scratched and damaged the surfaces by using
improper tools and methods. The owner submitted a claim for the
costs to replace the damaged windows. The insurance company denied
coverage relying on an exclusion in the policy precluding coverage
for the “costs of making good faulty workmanship”.
There was an exception to this exclusion that the owner relied
upon. This exception provided that coverage would still be
available for physical damage resulting from the
