Insurance law – Homeowner’s insurance – Coverage – Interpretation of policy – Water damage – Exclusions – Wear and tear
Water damage caused by water seeping through the foundational walls of an insured’s property was outside the scope of the insured’s “water escape” coverage, as being “ground water” or “surface water”. It did not matter whether this water seepage happened slowly or suddenly.
 O.J. No. 1834
2016 ONSC 2318
Ontario Superior Court of Justice
April 6, 2016
S.A.Q. Akhtar J.
This action arose after the insured plaintiff’s home sustained significant water damage. The cause of the water damage was central to the case, and in dispute. The plaintiffs took the position that the damage was caused by water entering the home through its windows during a heavy rainstorm. The plaintiffs further alleged that, around the same time, there was a sudden and accidental escape of water from the plumbing in two areas of their basement.
The defendant insurers disagreed. In their view, the evidence suggested that the water damage was caused by water seeping through the property’s foundation, in addition to general physical depreciation of the structure. The defendant insurers concluded that this cause of loss was the subject of an exclusion clause under the insured plaintiff’s policy, and denied coverage. The plaintiff sued.
The action proceeded by summary judgement. After confirming the matter was suitable, the Judge set out the relevant terms of the insured’s policy with the defendants (the “Policy”):
INSURED PERILS – Dwelling Building…
You are insured against all risks of direct physical loss or damage subject to the exclusions and conditions of this Policy
INSURED PERILS – Personal Property
Your are insured against direct loss or damage caused by the following perils as described, subject to the exclusions and conditions of this policy:
8. Water Escape. This peril means loss or damage resulting from:
(a) the sudden and accidental escape of water from a watermain;
(b) the sudden and accidental escape of water or steam from within a plumbing … system or domestic water container, which is located inside your dwelling;
(c) the sudden and accidental escape of water from a domestic water container located outside your dwelling. However, such damage is not covered when the escape of water is caused by freezing;
(d) water from the accumulation of ice or snow on the roof or eaves trough, which enters the dwelling through a roof;
But we do not insure loss or damage:
ii. caused by continuous or repeated seepage or leakage of water;
iii. caused by the backing up or escape of water from a sewer, storm drain, drain, sump or septic tank;
iv. caused by ground water or rising of the water table;
v. caused by surface waters including flood, unless the water escapes from a watermain or from a domestic water container located outside your dwelling;
EXCLUSIONS – LOSS OR DAMAGE NOT INSURED
16. caused by settling, expansion, contraction, moving, bulging, bucking or cracking, except resulting building glass breakage;
20. wear and tear, inherent vice, latent defect, mechanical breakdown or deterioration, extremes of temperature, rust or corrosion;
21. the cost of making good faulty material or workmanship;
Ground Water means water in the soil beneath the surface of the ground, including but not limited to water in wells, underground streams and percolating water;
Surface Waters means water on the surface of the ground where water does not usually accumulate in ordinary watercourses, lakes or ponds;
Watermain means a pipe forming part of a water distribution system, which conveys consumable water but not waste water.
The Judge then considered the parties’ expert reports on the cause of the damage. This evidence was complicated by the fact that the plaintiffs had attempted to repair the damage prior to involving their insurer. Nonetheless, the all four expert reports concluded that the water damage was caused or contributed to by water seepage through the foundation wall. Some of the reports also identified contributing factors like weeping tiles, a sloped roof and a sloped foundation. One report further noted that there was no physical evidence of a plumbing leak. That report found the overall cause to be “pre-existing wear and tear related conditions in addition to lack of general maintenance and repair resulting in further deterioration of building components”.
Based on the expert evidence and the Policy, the Court concluded that the damage was not covered. The Judge had “no doubt” that the type of water entry into the property constituted “ground water” or “surface water” as those terms were defined in the Policy, and thus outside the scope of coverage per paragraph 8 (above). In doing so, the Judge noted that due to the language of paragraph 8, it did not matter whether the seepage had occurred suddenly (after the alleged rainstorm) or overtime. The Judge also found the remainder of the alleged damages were excluded, as being “settling, buckling and cracking” and “wear and tear”.
The Judge dismissed the plaintiffs’ claim with costs to the defendants.
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