Insurance policy doesn’t entitle family to additional rebuilding costs: Supreme Court

OTTAWA — The Supreme Court of Canada has sided with an insurance company in a dispute over coverage for a family whose home on the Ottawa River was declared a total loss due to flooding.

Trillium Mutual Insurance Co. acknowledged that the loss of Stephen and Claudette Emond’s house in April 2019 was covered under a homeowners’ insurance policy.

The Emonds planned to rebuild their house, but there was disagreement about whether the policy covered the cost of additional work to comply with requirements set out by the local conservation authority.

The family sought a declaration that a “guaranteed rebuilding cost” provision entitled them to recover the total expense of rebuilding their house, with no limitation on coverage for the cost of meeting the legal requirements.

The Ontario Superior Court ruled in favour of the Emonds in 2022.

The Ontario Court of Appeal overturned the decision, finding the policy limited the recoverable costs of complying with the conservation authority’s requirements to $10,000.

Writing on behalf of a majority of the Supreme Court, Justice Malcolm Rowe said the contested language in the insurance contract “can bear only one reasonable meaning” — that the Emonds are not entitled to recover the increased compliance costs beyond the $10,000 limit.

Rowe, citing an earlier ruling of the top court, said in the judgment Friday that when the language of an insurance contract is unambiguous, effect should be given to that clear language, reading the contract as a whole.

The words of the contract must be given their ordinary and grammatical meaning, as they would be understood by the average person applying for insurance, and not as they might be perceived by those versed in the details of insurance law, he noted.

Ambiguity arises where there are multiple reasonable but differing interpretations of the policy, the judgment said.

Insurance policies often contain overlapping coverages, exclusions and conditions, and reading the contract as a whole is an exercise in searching for harmony rather than discord between its provisions, the top court added.

In the face of ambiguity, the court cannot rely on the language alone and instead must turn to other rules of contract interpretation for clarity, the court said.

The court said the interpretation should be consistent with the reasonable expectations of the parties, should not give rise to results that are unrealistic or that the parties would not have contemplated, and should be consistent with the interpretations of similar insurance policies.

If ambiguity remains, the court said, precedent dictates that the ambiguity must be resolved in favour of the insured party.

This report by The Canadian Press was first published Jan. 30, 2026.

Jim Bronskill, The Canadian Press