Hydro Blackout Claim Denied
Leo Deluca v. Lombard, [2008] O.J. No. 1230, is an interesting insurance coverage case arising out of the infamous hydro blackout in Aug. ‘03. The Plaintiffs commenced the claim as a class action, and sought coverage under an All Risks CGL policy. The Plaintiffs sought damages for the loss of their stock and for business interruption. Lombard denied coverage on the basis of two exclusions: damage caused by (1) changes of temperature or (2) mechanical or eletrical breakdown or derangement in or on the premises. The court held that both exclusions applied, and hence the action was dismissed. The court rejected the Plainitffs’ argument that clause (1) was restricted to only atmospheric changes in temperature. It also rejected the argument that clause (2) only applied to when the Plaintiffs’ equipment itself did not work properly. The equipment itself was not faulty, and in fact continued working once power was restored. The court found that clause (2) applied regardless of the cause of the breakdown (i.e. external or internal).
The court’s decision demonstrates the point that although this was an All Risks policy, a fact that is sometimes used to justify a stricter reading of an exclusion clause, the court will endeavor to enforce the plain meaning of policy wording.