Guaranteed replacement cost (GRC) coverage for rebuilding a flooded home in an area regulated by a conservation authority includes the increased regulatory compliance costs required for the rebuild, Ontario’s Superior Court has ruled in Emond v. Trillium Mutual Insurance Company.

In reaching its decision, the court rejected the insurer’s policy exclusion for any additional rebuilding costs ‘due to the operation of any law.’

The ruling suggests that GRC policy exclusions must explicitly refer to repair or replacement costs due to ‘rules, regulations, by-laws, or ordinances.’

In Emond, Stephen and Claudette Emond owned a home located on the Ottawa River, in the catchment area of the Mississippi Valley Conservation Authority (MCVA). Their home was destroyed by a flood in April 2019 and deemed a total loss.