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Canadian court rules insurer must cover machine failure; Design exclusion doesn't bar coverage for tunnel borer loss.

Publication: Business Insurance
Publication Date: 15-DEC-08
Format: Online
Delivery: Immediate Online Access
Full Article Title: Canadian court rules insurer must cover machine failure; Design exclusion doesn't bar coverage for tunnel borer loss.(News)(Canadian National Railway Co.)

Article Excerpt
Byline: KRISTIN GUNDERSON HUNT

OTTAWA-A Supreme Court of Canada ruling favoring policyholders likely will result in insurers rewriting language commonly used in exclusion clauses of policies covering specialized equipment for engineering and building projects, attorneys say.

Canada's highest court resolved a 14-year dispute between Canadian National Railway Co. and six insurers that included Royal Sun Alliance Insurance Group P.L.C.

In a 4-3 decision last month, the court ordered insurers to pay $30.8 million Canadian ($24 million) for costs associated with the 1994 failure of a tunnel-boring machine during a tunneling project under a river.

Montreal-based Canadian National insured the tunnel-boring...

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