THUNDER BAY — An insurance company will be required to defend the City of Thunder Bay against lawsuits related to pinhole leaks in copper water pipes.
The company has failed in its bid to reverse an earlier court ruling.
The city has been sued in several proceedings that allege its introduction of sodium hydroxide to the water supply from 2018 to 2020 caused property damage and other losses.
It added the chemical to the treatment process to mitigate the leaching of lead from lead water pipes in older sections of the city.
The city has denied allegations of negligence, and the claims have not been tested in a trial.
Great American Insurance Company contended it was not obligated to defend the city against the claims because the insurance policy included a clause excluding claims connected to the effects of lead.
In a decision issued earlier this year, a Superior Court judge said she found part of the exclusion clause to be ambiguous, and that the parties' interpretations of it were both plausible.
But Judge Tracey Nieckarz felt that "Expanding the scope of the exclusion to exclude coverage for accidental property damage caused by something other than lead while the insured is responding to a potential lead problem strikes me as going beyond the purpose of the exclusion."
She added that, based on evidence provided by the city, "damage to copper pipes is not an inherent lead-related risk, but rather is a water-related risk."
GAIC's appeal of her decision was heard last week at the Ontario Court of Appeal.
The three-judge panel found the company had failed to show any error in the trial judge's analysis and conclusion, saying it agreed that a section of the lead exclusion clause was ambiguous, and that the insurer is therefore required to defend the city against the lawsuits.
