Product damages sustained at a location not named in an insurance policy may still be covered by the policy.
Aviva Insurance applied under Rule 18A to have an action against it by Wingtat Game Bird Packers dismissed, or in the alternative, to determine the extent of the coverage for the loss. The application was dismissed and Aviva was required to cover the full loss suffered by Wingtat.
Wingtat Game Bird Packers (1993) Ltd. v. Aviva Insurance Co. of Canada [2008] B.C.J. No. 1379 British Columbia Supreme Court A.F. Wilson, J. July 21, 2008
Wingtat is in the business of slaughtering, processing, and packaging poultry and meat. In 1999 Aviva underwrote policies for Wingtat including a Commercial Building Equipment and Stock policy as well as a Multi Peril Extension Endorsement. Over the years Wingtat had operations in different locations. Location 1 was its poultry plant, Location 2 was a cold storage facility, and Location 3 was its retail shop. In July, 2005 a fire started at a warehouse where Wingtat had stock stored. This wharehouse was owned by another company, and was not listed in the Aviva policies.
Clause 2b of the policy showed Location 1 as having limits of $1,015,600.00 for Equipment and Stock, while Location 2 had limits of $1,000,000.00. There was no mention of Location 3 for the material policy period. Clause 2b covered "Temporary Locations", "Newly Acquired Locations", and "In-transit" coverage.
Aviva sought to apply a $25,000.00 limit per paragraph 10 of the multi peril extension endorsement which read:
"The limits applicable to the following extensions are in addition to the limits provided elsewhere. Temporary locations on stock and equipment while located at temporary locations not owned, rented or controlled in whole or in part by the insured. Limit of loss: $25,000.00 any one occurrence."
Wilson J. held that if this paragraph was intended to restrict coverage, it was a "limit masquerading as an extension" of coverage, and the ambiguity should be resolved in favour of the insured. There was no deductible or co-insurance clause in the Multi Peril Extension Endorsement. There were also no limits on coverage of items at the temporary locations. The insurer is in a position to exclude coverage for property at a specific location, but that was not done in this case. Since the Multi Peril Extension Endorsement was intended to provide additional coverage it should not be limited to the amount of $25,000.00 per occurrence. The application of the Plaintiff Wingtat for declaration that it was entitled to full indemnity for the value of stock which it had in storage at the warehouse, was granted. The application of the Defendant Avivia, that the action against it be dismissed, was dismissed.
This case was originally summarized by nmacdonald@harpergrey.com and originally edited by dpilley@harpergrey.com
