Supreme Court Rules: Insurance Policy Does Not Entitle Family to Extra Rebuilding Costs

Canadian Supreme Court

Adapted by Dan Bronskill from a report by The Canadian Press was first published Jan. 30, 2026. Jim Bronskill, The Canadian Press

A significant decision from the Supreme Court of Canada has clarified what homeowners can — and cannot — expect from their insurance policies when rebuilding after a disaster.

On January 30, 2026, the Court ruled that an Ottawa River family is not entitled to additional rebuilding costs beyond a $10,000 limit, despite having a “guaranteed rebuilding cost” endorsement on their policy.

What Happened?

Stephen and Claudette Emond’s home on the Ottawa River was destroyed in the April 2019 floods. Their insurer, Trillium Mutual Insurance, agreed that the loss was covered under their standard homeowner’s policy. However, when the Emonds began planning to rebuild, they encountered additional costs imposed by the local conservation authority — requirements such as flood‑proofing measures, elevation adjustments, and regulatory compliance steps. They argued that their “guaranteed rebuilding cost” (GRC) coverage should cover all expenses required to rebuild their home to current standards.

From Lower Courts to the Supreme Court

• Ontario Superior Court (2022): Ruled for the Emonds — saying the GRC endorsement should cover the full rebuild, including compliance costs.

• Ontario Court of Appeal: Overturned that decision — finding the policy explicitly limited compliance‑related costs to $10,000, regardless of GRC coverage.

• Supreme Court of Canada (2026): Upheld the Appeal Court.

  
  

  Justice Malcolm Rowe wrote that the policy language “can bear only one reasonable meaning” — the Emonds cannot claim costs beyond the $10,000 cap for regulatory compliance.

Why the Supreme Court Ruled This Way

The Court emphasized that when an insurance contract’s wording is:

• clear,

• unambiguous, and

• understandable to the average insured person,

…then the courts must give effect to that plain meaning.

Justice Rowe explained that insurance policies must be read as a whole, looking for harmony in how clauses work together — not isolating sections to create alternate interpretations. Even though insurance contracts can be complex, ambiguity only exists when more than one reasonable interpretation can be supported. In this case, the Court said there was only one reasonable reading: the $10,000 limit applied.

Guidance for Homeowners

This ruling reinforces several important realities for anyone purchasing property insurance:

1. “Guaranteed” rebuilding coverage has limits.

   Unless the endorsement explicitly states that regulatory or by‑law upgrades are fully covered, insurers can still rely on exclusions or caps.

   
   

2. Read endorsements and exclusions together.

   The Court expects homeowners to interpret the contract as a whole, not focus on the marketing‑style language of endorsements.

   
   

3. When in doubt, clarity rules — not assumptions.

   Courts only side with the insured when true ambiguity exists. Here, the language was found to be straightforward.

Why This Decision Matters

For many Canadians — especially those living along flood‑prone waterways like the Ottawa River and the Mississippi Lake and River— this decision serves as a reminder to carefully verify what is and isn’t covered when rebuilding after natural disasters. Climate‑related damages are rising, and regulatory requirements are getting stricter. Yet—unless specifically stated—insurance policies often place strict limits on coverage for upgrades mandated by authorities.

The Emonds’ case underscores how critical it is to review rebuilding provisions and exclusions, especially for homes in conservation‑regulated areas.

Sources

All facts were verified from:

• Canadian Press reporting on January 30, 2026 (via multiple outlets)

• Supreme Court docket & case background