Canada: The First Line Of Defence? Course Of Construction Insurance And Tort Immunity

Last Updated: September 24 2014
Article by Gordon A. Buck

On most construction projects involving multiple contractors and sub-contractors, it is common for the owner or general contractor to obtain course of construction insurance (also known as "builder's risk" insurance) to provide repair or replacement coverage for damage to the project while it is being constructed, and in some cases, for a specified period afterwards.

Where a claim is made involving damage to property while under construction, the presence of course of construction insurance, or even an agreement to provide such insurance, can be a party's first line of defence against a claim, even where the damage was caused by that party's own negligence. A defendant can be relieved from liability by operation of the doctrine of tort immunity, which provides that a party may, in certain circumstances, be immunized from the consequences of its own negligence. The circumstances in which tort immunity may apply fall into two broad categories: contractual covenants to insure and waivers of subrogation.

Covenants to insure are frequently found in construction contracts and usually require the owner or general contractor to place course of construction insurance covering the project against loss or damage, and including the contractors, sub-contractors, or consultants (as the case may be) as insureds under that policy. Where a claimant agreed to place such insurance, the doctrine of tort immunity provides that the claimant has in effect waived the right to recover any loss or damage from the beneficiaries of the agreement to insure.

Tort immunity arises in these circumstances on the basis of the contractual agreements between the parties, not on the basis of the wording of the insurance policy. The fact that the insurance may not have been placed at all, or did not include the appropriate coverages, does not displace the operation of the doctrine. In one case in Ontario involving a construction contract,1 the general contractor had failed to place the appropriate 'all-risks' property insurance as contemplated by the contract. A flood occurred at the project which was admitted to have been caused by the negligence of a sub-contractor. The sub-contractor successfully defended the claim on the basis that the general contractor had covenanted to insure against risks of flood, and therefore the sub-contractor was immune from liability for its own negligence, even though there was in fact no insurance to cover the loss.

The benefit of a covenant to insure will often be extended to employees of the contracting parties.  In one case involving a construction subcontract, the Ontario Court of Appeal ruled that a covenant to insure "implicitly intended the benefit of the fire insurance to extend to the employees" of the subcontractor, and therefore both the subcontractor and its employees were immunized from a subrogated claim.2

In all cases, the important question is what the contractual language indicates about the intention of the parties as to who was to bear the risk of any loss. The Courts have noted that while it is possible to rebut the presumption of tort immunity arising from a covenant to insure, this can only be done by "quite clear" language.3  It is therefore important to examine the overall language of the contract to determine the parties' intentions.

Tort immunity can also arise through a waiver of subrogation. Unlike covenants to insure, waivers of subrogation tend to revolve around the language of the insurance policy at issue.  Where the party being pursued is an insured under the policy, the Courts will generally find that any subrogated action is barred on the basis of the well-established principle that an insurer cannot subrogate against its own insured.4

This situation frequently arises in the context of course of construction insurance. Such policies typically include contractors, sub-contractors and trades as named or additional insureds, however there may be other parties who are covered by the policy despite the fact that they are not specifically named as insureds. In cases involving course of construction policies, the Courts have generally included as insureds those parties without whose contributions to the project were necessary for its completion.

In some cases, the insurance provisions in the parties' contract may stipulate that the policy to be obtained shall contain an express waiver of subrogation. In such cases, this is usually a clear indication that the parties intended that any subrogation rights would be waived, and therefore the doctrine of tort immunity will apply.

As with covenants to insure, the benefit of a waiver of subrogation may be extended to sub-contractors or employees of the named insureds.

Where claims arise for loss or damage to a project under construction, the first line of defence against such claims may be the doctrine of tort immunity. In such cases, it will be important to carefully examine both the contract and any policies of insurance to determine whether the claiming party has waived any right to pursue the allegedly negligent party for the damage. In many cases, this may provide a complete defence to the claim.


1 Active Fire Protection 2000 Ltd. v. BWK Construction Company Limited (2005), 45 C.L.R. (3d) 278 (Ont. C.A.).

2 Madison Developments Limited v. Plan Electric Co. (1997), 152 D.L.R. (4th) 653 (Ont. C.A.).

3 North Newton Warehouses Ltd. v. Alliance Woodcraft Manufacturing Inc., 2005 BCCA 309.

4 Commonwealth Construction Company Limited v. Imperial Oil Ltd., [1978] 1 S.C.R. 317.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Gordon A. Buck
Similar Articles
Relevancy Powered by MondaqAI
Thompson Dorfman Sweatman LLP
Alexander Holburn Beaudin + Lang LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Thompson Dorfman Sweatman LLP
Alexander Holburn Beaudin + Lang LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions