Insurance Law Blog
Knowledge Center

Coverage dried up for desiccant supplier

August 9, 2022

Insurance law – Liability insurance – Wrap up policies – Interpretation of policy – Construction development – Duties and liabilities of insured – Practice – Summary judgments

Strata Plan BCS 3206 v. KBK No. 11 Ventures Ltd., [2022] B.C.J. No. 821, 2022 BCSC 766, British Columbia Supreme Court, May 10, 2022, M.B. Blok J.

Honeywell sought coverage under a wrap-up liability policy relating to the construction of the Shangri-La in Vancouver. Honeywell was a third party in an underlying action in which owners allege that the windows are deficient. The windows allegedly fog up due to moisture and are prone to spontaneous failure. Honeywell was alleged to have manufactured the desiccant incorporated in the window panes, which was intended to absorb moisture.

The wrap-up policy insurer, XL, denied coverage on several grounds, including that Honeywell was not an insured under the policy. Under the policy, “insured” included each contractor designated as an insured under written contract with the named insured, its “sub-contractors” and their “sub-contractors”. The definition of “contractors” and “sub-contractors” included all persons or organizations who performed any part of the work under the insured project, but did not include “suppliers whose only function is to supply materials, machinery or other supplies to the project and who do not carry out any installation, construction, or supervisory work on the insured project”. The insurer’s position was that Honeywell fell into the latter category and therefore was not an insured.

Honeywell argued that it was not merely a “supplier”, but that Honeywell was alleged to have manufactured the desiccant. Honeywell argued that supplying and manufacturing are different activities, and that if the insurer had intended to exclude coverage to manufacturers then it could have done so in the policy. However, the court agreed with the insurer, noting that Honeywell’s position did not fit well with the “commercial atmosphere” of a wrap-up liability policy. The court found that Honeywell’s position failed to interpret the entire provision as a whole, in the context of the nature and purpose of a wrap-up liability policy. As Honeywell was not an insured, the court did not consider the insurer’s other grounds for denying coverage.

This case was digested by Joe Antifaev, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Joe Antifaev at [email protected].

To stay current with the new case law and emerging legal issues in this area, subscribe here.

Tags

Expertise

Important Notice: The information contained in this Article is intended for general information purposes only and does not create a lawyer-client relationship. It is not intended as legal advice from Harper Grey LLP or the individual author(s), nor intended as a substitute for legal advice on any specific subject matter. Detailed legal counsel should be sought prior to undertaking any legal matter. The information contained in this Article is current to the last update and may change. Last Update: August 9 , 2022.

Related

Monique Sever participated in International Legal Technology Association’s video titled “Diversity in eDiscovery: It’s No Longer a Man’s World”
Monique Sever participated in International Legal Technology Association’s video titled “Diversity in eDiscovery: It’s No Longer a Man’s World” Monique Sever participated in International Legal Technology Association’s video titled “Diversity in eDiscovery: It’s No Longer a Man’s World”
An individual board member may disclose confidential board information to their own lawyer on matters affecting them personally
An individual board member may disclose confidential board information to their own lawyer on matters affecting them personally An individual board member may disclose confidential board information to their own lawyer on matters affecting them personally
Rose Keith, KC authors quarterly Mediation Moment Column for Spring 2024 Edition of The Verdict
Rose Keith, KC authors quarterly Mediation Moment Column for Spring 2024 Edition of The Verdict Rose Keith, KC authors quarterly Mediation Moment Column for Spring 2024 Edition of The Verdict
Dan Reid interviewed by Law360 in article titled “B.C. strengthens information-sharing protections in child welfare legislation after court decision”
Dan Reid interviewed by Law360 in article titled “B.C. strengthens information-sharing protections in child welfare legislation after court decision” Dan Reid interviewed by Law360 in article titled “B.C. strengthens information-sharing protections in child welfare legislation after court decision”
Harper Grey proudly sponsors The Lawyer Show
Harper Grey proudly sponsors The Lawyer Show Harper Grey proudly sponsors The Lawyer Show Harper Grey proudly sponsors The Lawyer Show
Drew Lawrenson and Arjun Dhaliwal to attend NABOC Vancouver Conference
Drew Lawrenson and Arjun Dhaliwal to attend NABOC Vancouver Conference Drew Lawrenson and Arjun Dhaliwal to attend NABOC Vancouver Conference Drew Lawrenson and Arjun Dhaliwal to attend NABOC Vancouver Conference
Leyla Salmi to attend UBC’s 2024 Spring Graduation Ceremony as Science Alumni Representative
Leyla Salmi to attend UBC’s 2024 Spring Graduation Ceremony as Science Alumni Representative Leyla Salmi to attend UBC’s 2024 Spring Graduation Ceremony as Science Alumni Representative
Norm Streu discusses understanding the legal obligations of confidentiality with Business In Vancouver
Norm Streu discusses understanding the legal obligations of confidentiality with Business In Vancouver Norm Streu discusses understanding the legal obligations of confidentiality with Business In Vancouver
Articling student Zheng-Yi Ong attends 17th Annual FACL Ontario Conference and Gala
Articling student Zheng-Yi Ong attends 17th Annual FACL Ontario Conference and Gala Articling student Zheng-Yi Ong attends 17th Annual FACL Ontario Conference and Gala
Rachel Wood joins Harper Grey as an Associate
Rachel Wood joins Harper Grey as an Associate Rachel Wood joins Harper Grey as an Associate
Harper Grey to host Empowering Female Entrepreneurs: Business Basics Webinar
Harper Grey to host Empowering Female Entrepreneurs: Business Basics Webinar
Harper Grey Professional Regulation Group recognized as “Consistently Recommended” by 2024 Canadian Legal Lexpert Directory
Harper Grey Professional Regulation Group recognized as “Consistently Recommended” by 2024 Canadian Legal Lexpert Directory
2024 Kathy O’Donovan Award of Excellence
2024 Kathy O’Donovan Award of Excellence
TAG Alliances published article authored by Norm Streu
TAG Alliances published article authored by Norm Streu TAG Alliances published article authored by Norm Streu
Harper Grey continues to support West Coast LEAF Through Supporter Sponsorship of 2024 Equity Breakfast
Harper Grey continues to support West Coast LEAF Through Supporter Sponsorship of 2024 Equity Breakfast
arrow icon

Subscribe