In Lebel v. 9067-1959 Québec inc. (2014 QCCA 1309), the Court of Appeal discussed the obligation of the insureds to minimize damages caused by water leaks that occurred in their building.

While carrying out repairs to the insureds’ roof, the contractor hired by the insureds failed to protect the roof from rain which then seeped into the building. The insureds claimed from their insurer, among others, compensation for the costs to repair their property and the financing costs incurred.

At trial, the insurer argued that the clause excluding damages caused by rain penetration “through openings in roofs” applied and that the insureds took too long to carry out emergency work and therefore failed to its minimize damages.

The Superior Court found that the exclusion clause did not apply, considering that the direct cause of the damage was not the rain, but rather the fault of the contractor who was negligent in failing to protect the work. The Court therefore concluded that the claim was covered by the policy but only granted part of the damages claimed since some of them were the result of the insureds’ failure to quickly undertake emergency work to minimize the damages.

The Court of Appeal confirmed that the insureds did not act diligently. The Court observed that they had a duty to take reasonable steps to prevent further damages and that such obligation is evaluated according to an objective test, namely that of a reasonable person placed in the same situation. Where this requirement is not met, the insured commits a fault and therefore the insurer does not have to pay for the additional damages which are considered as indirect damages.

In this case, the insureds were advised by the insurer of its refusal to indemnify them from their loss the day aft er the occurrence. Evidence showed that the insureds knew the importance of acting quickly in these circumstances and that their financial situation was not an obstacle.

The Court of Appeal also underlined that the obligation to minimize damages was not diminished or eliminated by the refusal of the insurer's coverage.

As for the insurer’s duty to advise the insureds, the Court of Appeal pointed out that its existence and extent depended on the professional’s experience and on the inexperience of the customer.

The Court held that even if the insureds had no experience in emergency work, the insurer, in denying coverage in good faith, no longer had the duty to advise the insureds, which is considered an “incidental” obligation to the insurance contract.

Moreover, even if the Court had concluded that the insurer breached its duty to provide advice, the insureds’ obligation to minimize their damages still remained and had to be respected.

Finally, the Court of Appeal held that the Superior Court did not err in assessing the damages and refused to grant the financing costs claimed by the insureds, these costs being considered as indirect damages.