Coverage for losses due to environmental contamination in
residential homeowner insurance policies is rare. Where a homeowner
discovers contamination at his or her property due to an unknown
source or, worse, contamination at adjacent properties emanating
from the home, the homeowner may not have any insurance coverage to
cover the cost of remediation. Can a homeowner undertake the
remediation and then claim that he or she has coverage under the
doctrine of imminent peril?
This question was recently considered by the Nova Scotia Court
of Appeal in Garden View Restaurant Ltd v Portage La Prairie Mutual
The plaintiff owned a residential home. The plaintiff discovered
that a copper pipe connecting the fuel oil tank to the furnace had
been vandalized and had caused fuel oil to discharge on the
The plaintiff retained an environmental consultant to remediate
the contamination. The remediation involved excavation of impacted
soil, groundwater testing and sub-slab air
The plaintiff claimed the cost of remediation under its
homeowner's policy. The defendant insurer acknowledged coverage
for $10,000 and denied the rest of the claim.4
The plaintiff applied to the Nova Scotia Supreme Court and then
to the Nova Scotia Court of Appeal for a declaration that the
insurer was liable to pay for the entire cost of remediation.
In both proceedings, there were two primary issues:
Was there damage to insured property
so as to invoke coverage under the policy?
Did the doctrine of imminent peril
On the first issue, both Courts held that the specific policy
wording did not include the soil and groundwater underneath the
building as "insured property". The policy was clear that
the "insured property" included the building
only.5 For this reason, there was no coverage under the
policy for the remediation costs.
More interestingly, on the second issue, the Courts reviewed the
seldomly applied doctrine of imminent peril. The Court of Appeal
described the doctrine as follows:
The doctrine of imminent peril is a common law principle that
permits an insured to recover damages resulting from preventative
action taken to stop what would otherwise be an imminent peril (for
which coverage is provided under the policy) from occurring.
The doctrine of imminent peril therefore requires the
There must be an operating peril of
the type or category described in the insurance contract; and
The danger must be present in the
sense that unless something is done, damage will ensue; i.e., it is
The plaintiff submitted that it had coverage under the policy
for losses due to vapours from the contamination entering adjacent
properties. The plaintiff submitted that these vapours would have
occurred if the plaintiff had not undertaken the
remediation.7 For these reasons, the plaintiff believed
that it had coverage under the doctrine of imminent peril.
Both Courts disagreed. The Court of Appeal held that there was
no coverage under the policy for losses due to these
vapours.8 Further, the plaintiff's theory that there
were pathways by which vapours could have entered the properties
was unsupported by the evidence.9 The vapours were not
imminent or likely to occur at any moment.10 There was
no evidence that the remediation work was motivated by the
intention to stop vapours from entering the adjacent
While the plaintiff was unsuccessful in this case, insureds
should note the Court of Appeal's following comments on the
doctrine of imminent peril:
By requiring the peril and damage to be inevitable and imminent,
insurers will not be obliged to pay and insureds will not be paid -
other than in cases in which damages are a virtual certainty to
occur at any moment, unless averting action is taken. The burden is
on the insured to establish facts that trigger the
Despite the requirement for inevitability in the doctrine, the
burden of proof remains unchanged. An insured must show on a
balance of probabilities that the damage was
1. 2016 NSCA 8.
2. Ibid at para 3.
3. Ibid at para 5.
4. Ibid at paras 6 and 7.
5. Ibid at paras 19 and 20.
6. Ibid at paras 29 and 30.
7. Ibid at paras 38-40.
8. Ibid at para 67.
9. Ibid at para 49.
10. Ibid at para 42.
11. Ibid at para 60.
12. Ibid at para 34.
13. Ibid at para 36.
Written with the assistance of Anand Srivastava,
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.
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