INNOVATION May-June 2018

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INSURABLE INTEREST: BREACH OF CONTRACT AND INSURANCE IMPLICATIONS BENJAMIN KENT, B.A., CIP – MARSH CANADA LTD. BRIAN RHODES, PARTNER – DOLDEN WALLACE FOLICK

the engineer ultimately withdrew from the project without finishing the work. At trial, the engineering firm was found liable for breach of contract in part for its failure to provide accurate and timely engineering drawings, and both defendants (the firm and its principal) were found liable for negligence. They both owed a duty of care to the plaintiff and were found to have made untrue, inaccurate, or misleading representations about when the work would be finished, which were relied upon. Because the defendants had previously done work for the plaintiffs, the trial judge found it was reasonable for the plaintiffs to have relied on the assurances. TAKEAWAYS ABOUT THE CASE It’s important to note that a professional liability policy does not cover a deliberate breach of contract or delays by an engineer in the production of engineering drawings. However, some policies do provide coverage if a delay is due to inaccurate work. If the engineering drawings need to be re-created because of errors in the originals, some insurance policies can respond to the claim. If, however, the engineer or geoscientist is unable to meet the deadline due to lack of resources or staffing, or simply forgets to meet the deadline, no coverage would be afforded under the policy. The case also highlights the importance of good communication between the consultant and general contractor. If an engineer or geoscientist knows they are not going to be able to meet the deadlines set out in the contract, it is important that they make sure this is properly communicated to all parties. For more information, contact: Benjamin Kent, B.A., CIP, Client Executive Marsh Canada Limited — Vancouver Direct 604.692.4838, mobile 778.228.6709 Email: Benjamin.Kent@Marsh.com Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman. Copyright © 2018 Marsh Inc. All rights reserved. The opinions contained in this article are those of Marsh and not necessarily those of Engineers and Geoscientists BC. This article is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on Marsh’s experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. j

Hollowcore Incorporated v. Visocchi (2014 and 2016) is a case that involved an action brought by a general contractor against an engineering firm and its principal. The claim was based on alleged breach of contract and negligence in the completion of the engineering work. NEGLIGENCE IN PROVIDING ENGINEERING DRAWINGS In this instance, the engineering firm was retained to prepare drawings for an addition to a commercial parking garage. The completion of the project was delayed because the drawings had to be corrected and resubmitted multiple times;

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