This page is part of the overview of international insurance case law. It collects 12 decisions of foreign courts on this topic, in chronological order, with a short synthesis. Foreign decisions are not binding in Estonia. Citation conventions and links are explained on the overview page.
Synthesis
These judgments address three questions. First, the reach of faulty workmanship exclusions. What is excluded is the cost of redoing the faulty work, not resulting damage, which may affect the very property on which the work was performed; the line is drawn by reference to the scope of the contractor's contractual work (Ledcor). A design exclusion does not apply merely because a state-of-the-art design failed (CN Rail). Second, timing and nature of loss: the insured event occurs when physical damage happens, not when it is discovered (Don's Building), and the ordinary language of the terms prevails over technical terminology (BGH IV ZR 62/22, NJA 2024 s. 52). Third, reinstatement: limits on replacement and rebuilding benefits and their assignability (Avonside, Skyward, Xu, Emond). In Estonia see VÕS § 476 (duty to indemnify), § 479 (insurable value) and § 488 (duty to prevent and mitigate loss).
Decisions
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] SGCA 27
Singapore Court of Appeal, 27.06.2008 · Singapore · para 172 · contractors' all risks; contextual interpretation; extrinsic evidence; exclusion
A contractor caused a fire that damaged the employer's existing property and claimed under the liability section of a contractors' all risks policy. The Court of Appeal set out Singapore's contextual approach to interpreting written contracts and the admissibility of extrinsic evidence, and held that the contractor's liability for damage to the employer's existing property fell within Special Exclusion 4(b); the appeal was allowed (para 172). The case is a foundation of Singapore contract interpretation. Relevance: interpretation under VÕS § 29 by reference to the parties' actual intention and the circumstances.
Text of the decision: elitigation.sg
Don's Building Supply, Inc. v. OneBeacon Insurance Co., 267 S.W.3d 20 (Tex. 2008)
Supreme Court of Texas, 29.08.2008 · United States, Texas · parts I-III · CGL; timing of property damage; actual injury rule; duty to defend
Moisture penetrating a facade system damaged homes years before the damage was discovered. Answering certified questions from the federal court, the Supreme Court of Texas held that under an occurrence-based CGL policy property damage occurs when actual physical injury happens, not when it is or could have been discovered; damage 'comes to pass' rather than 'comes to light'. The duty to defend arose where the complaint alleged damage during the policy period. Relevance: distinguishing occurrence and claims-made triggers in liability insurance (VÕS § 510).
Text of the decision: law.justia.com (reprint)
Canadian National Railway Co. v. Royal and Sun Alliance Insurance Co. of Canada, 2008 SCC 66
Supreme Court of Canada, 21.11.2008 · Canada · paras 5, 30, 32, 53-56, 68-69 · builders' risk insurance; faulty design exclusion; state of the art; burden of proof
A tunnel boring machine used to build a railway tunnel broke down because of its design, although the design reflected the then state of the art. Insurers relied on the 'faulty or improper design' exclusion. The majority of the Supreme Court of Canada measured the design against the highest technical knowledge and standard available when it was prepared (the state of the art), not merely against ordinary professional diligence. A perfect design, failure-proof against every risk, was not required; the mere failure of the design did not establish that this policy's faulty design exclusion applied, since failure is not in itself fault (paras 5, 30, 32, 53-56). The insurers did not discharge their burden and the trial judgment was restored (para 68); three judges dissented. Relevance: design exclusions and the burden of proof.
Text of the decision: decisions.scc-csc.ca
Lennar Corp. v. Markel American Insurance Co., 413 S.W.3d 750 (Tex. 2013)
Supreme Court of Texas, 23.08.2013 · United States, Texas · consent to settle; prejudice to the insurer; facade remediation; property damage
A builder replaced a leaking facade system on homes and settled with the owners without the insurer's consent. The Supreme Court of Texas held that the insurer can escape liability for an unconsented settlement only if it proves prejudice; the jury found none. The cost of removing and replacing the facade to locate and repair water damage was covered property damage, and the trial court's judgment for the builder was affirmed. Relevance: the requirement of a causal link between breach and loss (VÕS § 452(2)).
Text of the decision: cases.justia.com (reprint)
Tower Insurance Ltd v Skyward Aviation 2008 Ltd [2014] NZSC 185
Supreme Court of New Zealand, 15.12.2014 · New Zealand · earthquake; replacement house; insured's choice; limit of indemnity
The insurer of a house damaged in the Christchurch earthquakes sought to limit the benefit to the cost of a comparable house. The Supreme Court held that the insurer could not do so: the insured chooses the replacement house, the insurer is liable for the lower of the cost of the replacement house or of rebuilding on site, and payment reimburses expenditure actually incurred rather than a lump sum. The appeal was dismissed and the cross-appeal on costs allowed. Relevance: reinstatement terms and the insured's choice.
Text of the decision: courtsofnz.govt.nz
Southern Response Earthquake Services Ltd v Avonside Holdings Ltd [2015] NZSC 110
Supreme Court of New Zealand, 22.07.2015 · New Zealand · earthquake; purchase of another house; cap on rebuild cost; professional fees and contingency
The owner of an earthquake-damaged house chose to buy another house instead of rebuilding, and the policy capped the benefit at the cost of rebuilding on the present site. The Supreme Court held that this cap must include a 10% contingency allowance and reasonable professional fees even though the rebuild was notional; the appeal was dismissed. Relevance: calculating reinstatement value where the property is not actually rebuilt.
Text of the decision: courtsofnz.govt.nz
Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37
Supreme Court of Canada, 15.09.2016 · Canada · paras 4-5, 24, 46-48, 67, 84-85, 95, 97-98, 125-128 · builders' risk insurance; faulty workmanship exclusion; resulting damage; standard form contracts
Window cleaners on a construction project scratched the windows they were cleaning, and the insurer relied on the faulty workmanship exclusion. The Supreme Court of Canada held that only the cost of redoing the faulty work (recleaning) was excluded, while the cost of replacing the windows was resulting damage within the cover; the line depends on the scope of the contractual obligation under which the faulty work was done (paras 84-85, 95). The purpose of builders' risk policies is to offer broad coverage (para 67). The interpretation of a standard form contract was reviewed for correctness as a question of law because it had precedential value and there was no meaningful factual matrix specific to the parties; a deferential standard may apply in other circumstances (paras 4, 24, 46-48). Cromwell J. concurred in the result but would have applied a deferential standard (paras 98, 125-128). The appeals were allowed (para 97). Relevance: distinguishing excluded work from resulting damage in builders' risk and liability policies.
Text of the decision: decisions.scc-csc.ca
Xu v IAG New Zealand Ltd [2019] NZSC 68
Supreme Court of New Zealand, 03.07.2019 · New Zealand · paras 13, 45-46, 58-59, 108 · replacement benefit; assignment of claim; sale of property; indemnity
An earthquake-damaged property was sold with an assignment of the insurance claims, and the buyer claimed the replacement benefit from the insurer. The majority of the Supreme Court held that the replacement benefit depended on reinstatement by the named insured and was not assignable without reinstatement (para 46); only the indemnity value was assignable (para 13). The appeal was dismissed (para 58), with two judges dissenting (paras 59, 108). Relevance: assignment of insurance claims on transfer of property (VÕS § 494 et seq.).
Text of the decision: courtsofnz.govt.nz
BGH 09.11.2022, IV ZR 62/22
Federal Court of Justice (BGH), IV Civil Senate, 09.11.2022 · Germany · Rn 8, 13 · natural perils; landslide; gradual soil movement; average policyholder
A house was damaged by slow soil movement, and the insurer argued that a landslide requires a sudden event. The BGH held that 'landslide' as defined in the terms, the natural sliding or falling of rock or earth masses, also covers gradual movement not visible to the eye; the terms contained no suddenness requirement, and the ordinary language of the average policyholder prevails over geological terminology (Rn 8, 13). The judgment below was set aside and the case remanded. Relevance: interpreting standard terms from the average policyholder's perspective (VÕS § 39).
Decision details and text: dejure.org
NJA 2024 s. 52 (Möbelvaruhuset i Boden), HD 25.01.2024, T 4849-22
Supreme Court of Sweden (Högsta domstolen), 25.01.2024 · Sweden · paras 16, 21, 23-25, 28, 34, 38 · all risks cover; sudden and unforeseen damage; snow load
A furniture store building was damaged through the combined effect of snow load and deficient construction, and the insurer refused payment because the conditions of the basic snow load peril were not met. The Supreme Court held that all risks cover may apply to such damage (para 21); 'sudden' means almost instantaneous, and 'unforeseen' is assessed objectively by reasonable foreseeability, not by the owner's actual knowledge (paras 23-25, 34). The insured was entitled to compensation and the appellate judgment was upheld (para 38). Relevance: the relationship between named perils and all risks cover and the notion of sudden and unforeseen damage.
Text of the decision: domstol.se
United India Insurance Co. Ltd. v. Hyundai Engineering & Construction Co. Ltd., 2024 INSC 431
Supreme Court of India, 16.05.2024 · India · paras 17-30, 32 · contractors' all risks; bridge collapse; design defect exclusion; burden of proof
Part of a bridge under construction collapsed, and the contractor claimed under a contractors' all risks policy; the insurer relied on the design and workmanship exclusion. The Supreme Court of India held that the insurer must plead and prove an exclusion with cogent evidence (paras 17-18); the burden was met by a government expert committee report based on site investigation and an unrebutted surveyor's report, whereas the opposing expert reports were not properly proved (paras 18-26). The appeal was allowed (paras 29-30). Relevance: the insurer's burden of proving exclusions and the weight of expert evidence.
Text of the decision: api.sci.gov.in
Emond v. Trillium Mutual Insurance Co., 2026 SCC 3
Supreme Court of Canada, 30.01.2026 · Canada · paras 4, 66, 89, 112, 114, 155 · guaranteed replacement cost; compliance cost exclusion; interpretive sequence
Rebuilding a damaged home required compliance with conservation authority requirements that increased the cost, and the insureds relied on a guaranteed replacement cost endorsement. Reading the policy as a whole and following the Ledcor interpretive sequence, the majority of the Supreme Court of Canada held that the policy was unambiguous: the compliance cost exclusion applied despite the endorsement, and the insureds recovered only CAD 10,000 under the exception (paras 4, 89, 112). Two judges dissented in part (paras 114, 155); the appeal was dismissed. Relevance: interaction of endorsements and exclusions and reading terms as a whole (VÕS § 29).