Replacement cost insurance no carte blanche for new building, court rules
TORONTO — An insurance company is under no obligation to pay for a replacement building that bears no resemblance to an insured property damaged by fire, Ontario’s top court ruled Tuesday.
The only obligation, the Court of Appeal found, was to pay the owners the actual value of the burned buildings.
The case arose in March 2011, court records show, when fire damaged an income property in Ottawa comprising one-, two- and three-storey buildings with 15 residential units and 13 commercial units. The owners, Helene Carter, Edmond Blais and Donald Givogue, opted to demolish the site and build an 8-1/2 storey condominium, with triple the total area and 129 residential units.
The trio then made a claim against their insurance company for $5.7 million plus another $511,000 — the cost of the new building and building code upgrades — under terms of their policy that provided for reimbursement for the repair, construction or reconstruction of a new property of “like kind and quality” as the damaged one.