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January 2020

A power outage may not qualify for damage on premise

Case Study: La Rose Bakery 2000 Inc. v. Intact Insurance Company (2019 ONCA 850)

Van Krkachovski
Van Krkachovski,

Theresa Hartley
Theresa Hartley,

By Van Krkachovski and Theresa Hartley

The appellant in this matter operates a commercial bakery located inside of a shopping mall in Etobicoke, Ontario, and is seeking coverage from the respondent insurer for losses sustained from an ice storm in December 2013. The ice storm did not cause any physical damage to the shopping mall or to the bakery, but the resulting power outage caused spoilage within the bakery. Power was ultimately restored without any intervention required on the part of appellant or the mall owner.

The bakery issued a claim to its insurer – Intact – seeking coverage for losses relating to stock spoilage and business interruption. Intact defended the appellant's claim, relying on exclusions in the policy. In granting a summary judgement in favour of the insurer, the motion judge determined that the exclusionary clauses governing stock spoilage and business interruption, as per the policy, would serve to preclude coverage for the losses claimed by the bakery.

On appeal, the bakery submitted that the motion judge erred both in his interpretation of the policy and in deciding the motion in the absence of expert evidence. The exclusion for stock spoilage in the policy provided that coverage would not be provided for damage resulting from “partial or total interruption to the supply of electricity”, arising from loss or damage to any electrical transmission or distribution lines, except for those located on the “premises”.

The appellant bakery argued that the damage from the ice storm and resulting power outage was to the lines and/or structures on the premises, whereas the respondent insurer gave evidence that the damage was to lines or structures not located on the premises. The appellant ultimately failed to file evidence that showed that the loss or damage occurred on its premises, and as a result, their appeal was dismissed.

Read the full decision or read other Case Summaries for January

  1. A Duty of Good Faith is Foundational
  2. Location of Loss


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