The words “within your dwelling” in an insurance policy are not synonymous with “inside your dwelling”

Insurance law – Homeowner’s insurance – All-risk insurance – Water damage – Exclusions – Interpretation of policy – Practice – Summary judgments – Appeals

Gill v. Wawanesa Mutual Insurance Co., [2023] B.C.J. No. 339, 2023 BCCA 97, British Columbia Court of Appeal, February 27, 2023, P.M. Willcock, S.A. Griffin and P. Abrioux JJ.A.

The insured sought coverage from his insurer pursuant to the sewer back-up endorsement for water damage resulting from water back-up due to a clogged perimeter drainage system.  The water escaped through a drain located in the sun deck and entered the home’s basement from the deck.  The sewer back-up endorsement provided coverage for a “sudden and accidental backing up or escape of water or sewage within your dwelling … through a sewer on your premises.”  The endorsement defined “dwelling” as “the building … wholly or partially occupied as a private residence.”  The insurer denied coverage on the basis that the sudden and accidental backing up or escape of water did not occur “within the dwelling”.  The Court held that although the sun deck was part of the dwelling, it was not inside the exterior walls of the building and therefore was not “within the dwelling”, thus the escape of water did not occur “within the dwelling”.

The BC Court of Appeal allowed the insured’s appeal, finding that the judge had not interpreted the policy as a whole and had misapplied the average person perspective and therefore arrived at an incorrect interpretation.  The Court found that, in interpreting the words “within your dwelling” the judge erroneously considered the perspective of an average person considering what was inside their home, as opposed to an average person considering the coverage afforded by their policy.  The Court found that the judge’s analysis incorrectly equated the plain language “within your dwelling” as meaning “inside” and “inside” to “indoors”.  The Court held that if the sun deck was part of the dwelling, as the insurer had conceded, the drain on the dwelling was thus within the dwelling.  The Court found that to hold otherwise “…results in the sun deck being both part of the dwelling but entirely outside the dwelling, an inconsistent and nonsensical result.”

The Court concluded that this interpretation was consistent with the perspective of an average person purchasing insurance considering whether a drain on the sun deck was within the dwelling when the sun deck itself was part of the dwelling, and also the parties’ expectations given that the sun deck was built and used as a living area of the insured’s home.

This case was digested by Tricia M. Milne, 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 Tricia M. Milne at [email protected].

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