The insurer brought an application seeking a declaration that there was no possibility a claim for  bodily injuries was covered under its insured’s policy. The court granted the declaration on the basis  that the policy’s declaration page clearly indicated that insurance was issued for the business  operations described on the declaration page to the policy. The injuries related to an accident  involving the delivery of lathes, which the court found were completely unrelated to the insured’s  stated business operations at the property and the injuries were therefore not covered under the  policy. In addition, the mere fact the insured’s employees may have assisted in the delivery of the  lathes was not sufficient to give rise to a claim under the policy.

[2014] O.J. No. 1748

2014 ONSC 2322

Ontario Superior Court of Justice

L. Ricchetti J.

April 14, 2014 

The insured was in the business of manufacturing and importing lampshades and applied for insurance coverage. The insurer performed an inspection of the insured’s place of business and noted that very little manufacturing was taking place at the property, and that there was no evidence suggesting that any other business or types of business were operated at the property. 

The insurer issued the insured a commercial general liability policy which included claims for bodily injuries. Importantly, the policy’s declaration page described the insured’s business operations at the property as manufacturing and importing lamp shades. 

The principal of the insured was also the principal of a second company, AIM. AIM was in the business of buying and selling heaving machinery, including lathes. AIM, AIM’s business or AIM’s business operations were not mentioned in the insured’s policy.

Unfortunately, an individual delivering lathes to the property was badly injured when the lathes fell from a forklift. The individual issued two claims related to his injuries. The second claim named the insured as a defendant. The insurer brought an application seeking a declaration with respect to its liability under the insured’s policy.

The issue before the court was whether or not the second claim raised a mere possibility that the claim might be covered under the insured’s policy, thereby triggering the duty to defend.

The court stated that the declaration page, which included the insured’s stated business operations, formed an integral part of the policy. Further, where an insurance policy is issued and specified to be for certain business operations of the insured, and where the business operations undertaken by the insured or a third party giving rise to the claim are entirely different and unrelated to the insured or the insured operations, then the policy will not provide coverage.

In this case, the court found that the off-loading of lathes at the property could in no way be described as related to the insured’s business operations. It was clear from the declaration that insurance was issued for the insured’s business operations and therefore the policy did not cover all liability claims which might arise at the property. In addition, the mere fact that the insured’s employees might have been involved in the off-loading of the lathes was not sufficient to give rise to a possible claim under the policy. Accordingly, the court granted the insurer a declaration to the effect that there was no possibility that the claims were subject to coverage under the policy.