The insurance contract clause that saved this self-insurer

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Clean Harbors Canada, one of North America’s largest hazardous waste haulers, is not liable for the cost of fire damage to a truck owned and operated by one of its contractors, has decided an Ontario court.

While performing a haul job for Clean Harbors, a 2007 Volvo haul truck was damaged in an electrical fire that occurred on July 5, 2018. Owned by haul truck service provider Ontario Heavy Xpress Ltd . (OHX), the truck was driven by Gergley Jakab, the sole director and shareholder of OHX.

In October 2018, Jakab retained an attorney to help him recover the value of the Volvo truck and related losses from Clean Harbors or its insurer, Chubb Insurance Company of Canada.

Chubb denied coverage, stating “there is no full or all-risk coverage under the Clean Harbors policy” to cover damage to Jakab’s truck. (Basically, Chubb insured liability losses for the company, but not first-party physical damage losses, which Clean Harbors self-insured.)

Jakab told the court that after signing the contract (which he read, despite English not being his first language), he asked Clean Harbors employees if their insurance covered him. He testified, although he did not call any witnesses, that someone told him he was “fully covered” by the police. (It’s not clear from the court ruling whether a Clean Harbors staffer told him this or another truck driver.)

Regardless, the court found that the phrase “fully covered” could have properly meant that Jakab had the company’s liability coverage, which is required by law to drive on the roads of Ontario. But that doesn’t mean the same as Jakab’s truck fire damage coverage.

Jakab felt that someone from Clean Harbors should have told him before he signed the contract. But the court concluded that if Jakab had read the entire document (which he claimed to have), he would have seen the following clause written in the insurance contract:

“Clean Harbors will make all insurance, except non-owned trailer liability coverage, available to the contractor for the purpose of insuring the equipment and the contractor under insurance policies obtained and maintained by Clean Harbors [Emphasis added]….

“Clean Harbors makes no representations or warranties as to the extent or adequacy of the insurance coverage it makes available and assumes no liability for the adequacy of such insurance. The contractor is solely responsible for ensuring the adequacy of the cover provided by this insurance. »

Thus, the court concluded that it was Jakab’s responsibility, before signing the contractual agreement with Clean Harbors, to ensure that he was covered for the fire damage to his truck, which was worth approximately $30,000. at the time of the fire. But the court noted that he had already signed the insurance contract before inquiring.

Also, even though Clean Harbors had indicated in casual conversation that by “fully insured” it did not mean for fire damage to the truck, it had no effect on the contract. The court noted that Clean Harbors’ insurance policy contained the following “entire contract” clause:

“This Agreement, including the attached Schedules, constitutes the entire agreement between the parties and supersedes all prior written or oral agreements between the Contractor and Clean Harbors; however, it may be changed or amended from time to time provided such changes are agreed to in writing between Clean Harbors and the Contractor. »

In other words, once signed, both parties to the contract were bound by the words written in the contract.

Discussions about what “fully covered” meant were informal conversations that took place outside the terms of the contract. They had no meaning unless both parties agreed in writing to include those definitions and understandings in an addendum to the contract.

Photo courtesy of iStock.com/THEPALMER

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