Court rules contractor damage should be covered by home insurance

Published: July 27, 2019

Updated: August 28, 2019

Author: Luke Jones



Does home insurance cover the customer if damage occurs accidentally when a contractor is working on the property? It’s a question that was raised during a recent case, and the answer seems to be yes, home coverage will protect the homeowner in these incidents.

However, until a recent court ruling, a lot of home insurance carriers would say the customer is not covered when a contractor accidentally damages a home. According to courts, exclusions for “property while being worked on” and “faulty workmanship” are not as extensive as insurers believe.

The precedent-setting case in question is Monk v. Farmers’ Mutual Insurance Company (Lindsay), which had its ruling handed and released on July 19. In its ruling, the Court of Appeal for Ontario upheld a previous Superior Court of Justice ruling that over $100,000 in damages to the home were covered in a claim made by Diana Monk as part of coverage she purchased for her Bracebridge log house through the all-risk “Security Plus” policy from Farmers Mutual.

In 2008, a contractor hired by Monk to restore the exterior of the property caused damage, including stained carpets, loose door frames, scuffs on windows, and more. After Farmers Mutual denied the claim, Monk started a coverage dispute against the contractor, Farmers, and the insurance broker that connected her with the company.

Farmers said it denied Monk’s claim based on her delay in notifying the broker about the damage, and two exclusions.

The exclusions according to Farmers were “the cost of making good faulty material or workmanship.” The other was for loss or damage to property “while being worked on, where the damage results from such process or work (but resulting damage to other insured property is covered).”

The court ruled both exclusions were invalid and should have been covered by the policy. However, Farmers Mutual got off the hook because the court agreed that Monk had waited too long after the damage occurred to make the claim.

Ontario Superior Court Justice Edward Koke ruled in 2017 that the two years Monk waited to make her claim to the broker was too long. Monk denies this version of events and insists she had reported the damage two years earlier in 2009. The court believed the brokerage’s version of the story to the homeowners.