No ambiguity in insurance policy decontamination cost coverage: Nova Scotia Court of Appeal

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The Supreme Court of Nova Scotia, finding that the loss was insurance coverage, ruled in the respondent’s favor. The insurers’ appeal argued that the lower court had erred in interpreting the insurance policy.

The Nova Scotia Court of Appeal, which dismissed the appeal with costs of $ 2,500 to the respondent, held that the policy covered the loss because the ordinary meaning of “sudden and accidental” included the mechanism by which the diesel fuel was discharged.

The appellate court determined that the lower court erroneously found an ambiguity in the coverage of the decontamination costs, but correctly concluded that the policy conditions covered the decontamination costs by applying the steps of the analysis of the decontamination. Supreme Court of Canada in Ledcor Construction Ltd. vs. Northbridge Indemnity Insurance Co., 2016 SCC 37.

The Court of Appeal concluded that by looking at the policy as a whole and applying ordinary meaning to its language, the decontamination clause was not ambiguous and applied to the causal events which had led to the diesel fuel releases. .

While “sudden” and “accidental” have similar meanings and convey the common element of the unexpected and surprise, not all sudden events are accidental, such as assault, and not all accidental events are sudden, such as deterioration of the food because it was left unrefrigerated, the appeals court said.


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