Dispute over the use of word ‘required’
When is an insurer “required” to pay professional fees?
A recent ruling in Ontario unpacked that very ambiguity in an insurance contract, finding that an insurer should pay the fees of a church’s a professional quantity surveyor.
The decision, Be In Christ Church of Canada O/A Welland Brethren in Christ Church v. Intact Insurance Company, 2019 ONSC 7412, said Intact must pay the church’s surveyor fees of $22,588.70, as the church rebuilt from a fire.
The wording that brought the case before the court read: “This Form is extended to cover reasonable fees charged by auditors, accountants, lawyers, architects, surveyors, engineers or other professionals retained by the Insured, for the purpose of producing or certifying particulars or details of the Insured’s business and that are required by the Insurer in connection with loss or damage caused to insured property by an insured peril.”
The section in dispute was “for the purpose of producing or certifying particulars or details of the Insured’s business and that are required by the Insurer.” Intact argued that only professionals it requires that are covered by this provision. In this case, Intact had hired its own professionals, while the church hired an additional surveyor for an alternate quote, outside of what was provided by Intact.
The church, on the other hand, said the surveyor was retained to get “the particulars” that Intact needed to show the “loss or damage” to the property. Therefore, the church would meet the coverage of the fees as “required.”
“[O]ne must ask whether that provision must be read in conjunction with the provision of the policy that requires the insured to provide particulars of its loss as soon as possible,” wrote Justice David Edwards in his decision. “Is that the details ‘required by the insurer’ or is it some other separate requirement of the insurer that it can impose solely because of this provision?”
The church’s surveyor quoted the church repairs would cost $1 million more than Intact’s proposed payment. Edwards concluded that the ambiguous wording should be interpreted to show that it is “the particulars of the loss that is required by the insurer and not the professional’s services or their fees.” Since the church did not have the expertise to assess the damage itself, it needed professional help — and was paying a premium for the insurer’s coverage, Edwards noted.
Edwards said in the decision that while the language varies from insurance policy to policy, the concept remains consistent across other cases.
“Read literally, it could mean that it is the fees and not the services of the professionals that are required by Intact that are covered. Read another way it is the particulars or details of the insured’s business that is required by Intact and coverage is for the fees of professionals retained by the insured to obtain this information,” said Edwards, later concluding:
“The fees covered are for professionals retained by the insured to assist in providing the insurer with details of the loss. Indeed, several cases make that assumption without even opining on that issue.”
Gord McGuire, a partner at Adair Goldblatt Bieber LLP in Toronto who represented the church, says that there is little, if any, precedent of this particular issue before the courts, because the professional fee amounts can be relatively small and arise in the midst of a claim.
“It is a very favorable decision for policyholders,” he says. “And insurers often take the position that was taken by the insurer in this case: that they have the discretion as to whether the insured party can avail itself of this coverage. The court said it was a resounding ‘no.’ That is not the case.”
Insurance adjusters have anecdotally advised clients that professional fees can only be reimbursed if the insurer required the professional, for example, if it asked for the professional to be hired.
“This decision provides a very clear precedent for insured parties,” he says. “The fee's already covered as long as they required to prove the loss. . . . So anytime someone suffers an insured loss, it's worth looking through their policy to see if they have any coverage because this can be very helpful.”
Bevin Shores, who represented Intact, was not immediately able to comment on the case’s outcome.