B.C. Supreme Court judge rejects company's interpretation of home insurance policy language regarding surface water

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      When Bryony Shannon Osborne purchased home insurance for her leased land on the Musqueam Indian Reserve No. 2, she wanted to be protected from water damage.

      So in addition to a basic policy, she also bought optional coverage for "WaterCover (Overland Water)" from Family Insurance Solutions Inc.

      This optional insurance covers loss or damage caused by surface water that enters the insured premises as a result of a sudden accumulation of rain, as long as the dwelling is not vacant.

      According to the optional policy, "surface water" is defined as "water which accumulates upon or submerges usually dry land, resulting from torrential rainfall, rapid snow melt, spring runoff, or the rising of, breaking out or overflow of any freshwater lakes, rivers, or watercourse whether natural or manmade, excluding: waves and flood (as defined) or spray from any of these".

      However, following heavy rain in December 2018 that damaged Osborne's backyard, the company refused to honour this optional policy.

      Family Insurance Solutions and other defendants argued in B.C. Supreme Court that language in the basic policy applied. It states that there is no coverage for water damage of any kind, including surface or overland water.

      Judge sides with resident

      Justice H. William Veenstra rejected the insurer's claim that the general policy's language superseded the coverage provided in the optional policy.

      "In my view, the clear language of the Overland Water Coverage provisions indicates that coverage is available for loss or damage to the Premises from perils falling within the scope of that policy extension," Veenstra stated in his oral reasons for judgment, which were posted on the B.C. Supreme Court website this week. 

      He also noted that "a straightforward reading of the Overland Water Coverage provisions" indicates to him that coverage is extended to loss or damage to the premises, including land". 

      "While the base coverage under the policy may be limited to Dwellings, Detached Private Structures and Personal Property, that does not mean that an extension of coverage must inevitably be similarly limited," he continued. That goes far beyond reading the contract 'as a whole'."

      Despite the ruling in Osborne's favour, the judge did not order the insurance company to pay her claim.

      Instead, Veenstra stated to the lawyers: "I am hopeful that between the two of you, you can come up with the terms of an order that encompasses the interpretation that I have provided."