In June 2022, the Supreme Court of British Columbia ruled that a sewer backup insurance policy only applies to a flood originating from “within” a dwelling and not from a drain overflow on a sun deck partially exposed to the outdoors.
This ruling comes from Gill v Wawanesa Mutual Insurance Company, 2022 BCSC 981. In this case, the perimeter drainage system of a house owned by Amritpal Gill and Baljit Gill became clogged in December 2019. As a result, water backed up and escaped through a drain in the sun deck area of the home and eventually found its way inside the home causing damage to the basement.
The Gills’ insurance policy did not include coverage for overland flood; however, it did include a Limited Sewer Backup Endorsement. This 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 Gills made an insurance claim for the damage caused by the blockage, but the insurer denied coverage. Due to the fact that the sun deck had a somewhat unique location and configuration, the issue in dispute was whether the water escaping from the sun deck’s drain that caused the damage escaped from “within [their] dwelling”.
Of note, the sun deck was approximately 18 x 80 feet and extended almost the entire width of the house. It also had a ceiling with light fixtures. The north side of the sun deck was below grade and there was a retaining wall approximately 4 feet high. The east side of the sun deck faced the rear of the lot and there was a pony wall approximately 3 feet high. At regular intervals along the pony wall there were 8 x 8 inch posts. The north and east sides were both open to the outdoors from the top of the retaining and pony walls to the ceiling. The west and south sides of the sun deck had full height walls that extended from the floor to the ceiling.
Despite this, the Court found that the water that caused the damage did not escape from within the dwelling but escaped from outside the dwelling. Justice Christopher Giaschi wrote:
any average person applying for insurance would understand the phrase ‘within your dwelling’ to mean inside the dwelling or inside the house, and for the average person, the determining factor in deciding whether something is ‘within’ a dwelling would be its location relative to the exterior walls of the dwelling. Something inside those exterior walls is ‘within’.
The Gills argued that the insurance policy was ambiguous because its definition of a sewer back-up referred both to “within your dwelling” and to “premises.” They submitted that the policy should be broadly interpreted to include the entire structure on the property, and that the appropriate question to ask is whether the loss took place within the entirety of the building/structure located on the property?
While the Court agreed that “premises” is a broader concept than just the four exterior walls of the building, it determined that the Gills’ were trying to introduce ambiguity into the policy’s definition of “building,” when in fact there was not any ambiguity. The Court did not agree with the Gills’ interpretation of the policy and stated that the proper question to ask iswhether the backing up or escape of water occurred “within [the] dwelling.” The court ruled that any average person viewing the sun deck, albeit a covered sun deck, would immediately know and understand it to be outside, not inside and therefore the Insurers determination to deny coverage was upheld.
For more information, please contact a member of the SVR Insurance Law group.
Case law report prepared by Chloe Campbell, Summer Student.