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LEGAL REPORT/LITIGATION to be true, would require the insurer to indemnify the insured for the claim. It is irrelevant whether the allegations in the pleadings can be proven in evi- dence. What is required is the mere possibility that a claim falls within the insurance policy," says the decision, written by Justice Marshall Rothstein. But it was how the court decided to interpret and define things like prop- erty damage and accidents that might have insurance companies scrambling to change the wording in their policies. The SCC decision says: "The plain and ordinary meaning 'property damage' in this case includes damage to any tangi- ble property and is not limited to dam- age to third party property. Hence, dam- age to one part of a building arising from another part of the same building could be included in the definition." It also added that the word "accident" should "also be given the plain meaning pre- scribed to it in the policies and should apply when an event causes property damage neither expected nor intended by the insured. The accident need not be a sudden event and can result from Key findings in An insurer is required to defend a claim where the facts alleged in the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim. The focus of insurance policy interpretation should first and foremost be on the language of the policy at issue. The duty to defend only requires a possibility of coverage, and that possibility is made out in this case. Having found the claims in the pleadings fall within the initial grant of coverage, the onus shifts to the insurance company to show that cov- erage is precluded by an exclusion clause. Depending on which version of the policy applies, there is a possibil- ity of coverage for damage to work completed by a subcontractor, for damage resulting from work performed by a subcontractor, or for damage resulting from the particular part of Progressive's work that was defective. Therefore, the duty to defend is triggered. — AB 40 JAN UARY 2011 www. CANADIAN Lawye rmag.com continuous or repeated exposure to con- ditions. Whether defective workman- ship is an accident is necessarily a case ings and the way in which 'accident' is defined in the policy." The court is, in essence, calling for clarity in the wording of the policies, says André Legrand, an insurance law- yer and partner at Ogilvy Renault LLP's Montreal office. In this case, the insur- ance company might have had a valid argument that the policy's intention was not to cover this circumstance, but the SCC wants to see that specifically in the wording of the policy. "The lesson here for insurers is that the policy wording must be clear. And any ambiguity, any "The lesson here for insurers is that the policy wording must be clear. And any ambiguity, any confusion in the wording will favour the insured." ANDRÉ LEGRAND, OGILVY RENAULT LLP specific determination. It will depend both on the circumstances of the defec- tive workmanship alleged in the plead- confusion in the wording will favour the insured," says Legrand. "It's not the first time that our courts remind par- ties that clear wording is needed, but here is a clear situation where the court, despite valid arguments put forward [by the insurance company] . . . chooses to adhere to very strict interpretation of the policy wording." Legrand adds the insurance indus- try in general, and underwriters — the people who come up with the policy wording — in particular, need to pay attention to the ruling. "They would be well-advised to review their policy wording in light of this judgment and other judgments as well . . . that put emphasis on the wording of the policy." But beyond the words, although Progressive is in line with previous cases siding with the insured when it comes to duty to defend in insurance cases, the latest ruling takes it further. "In general, I think it is safe to say that they have extended the coverage under a CGL The ruling is available at Pr o gr essiv e v. L ombar d Gener Pr o gr essiv e al 2010/2010sc Insur anc e Homes sc C L anada d. t o. c.le c33/2010sc of xum.umontr C v. L ombar d c33.html eal.c a/