Feb. 25, 2026 — The Supreme Court of Canada has sided with an insurer in ruling that homeowners cannot use a guaranteed rebuilding cost endorsement to recover unlimited regulatory compliance costs following a total-loss flood, and confirming that standard policy exclusions still apply unless expressly displaced by an endorsement.

In Emond vs. Trillium Mutual Insurance Co., released Jan. 30, the court dismissed the appeal of Stephen and Claudette Emond, whose Ottawa River home was destroyed by flooding in April 2019 and fell under rebuilding restrictions imposed by the Mississippi Valley Conservation Authority.

Trillium accepted coverage for the loss but said increased costs required to meet conservation authority rules were capped at $10,000 under the policy’s building bylaw and code compliance coverage.

The Emonds argued that their guaranteed rebuilding cost endorsement entitled them to full rebuilding costs without any regulatory cap.

Writing for the majority, Justice Malcolm Rowe held that the insurance contract, read as a whole, clearly limits Trillium’s exposure for legal compliance costs, even where a GRC endorsement applies.

“The language of the policy is unambiguous in excluding recovery of the increased costs of compliance, other than the $10,000 extended under a limited exception,” the Supreme Court said.

The GRC endorsement, the court ruled, “does not allow the Emonds to circumvent the compliance cost exclusion appearing elsewhere in the insurance policy.”

The Supreme Court rejected the argument that the GRC endorsement displaced or overrode the compliance cost exclusion.

“The GRC endorsement simply amends the basis of claim payment provision in the base policy,” the court said, and “does not amend any other part of the policy.”

The Insurance Bureau of Canada was one of the intervenors in the case and welcomed the decision, saying the ruling provides important clarity on how insurance policies are intended to operate.

“Guaranteed rebuilding cost endorsements are designed to protect homeowners against unexpected increases in construction costs, not to override compliance costs exclusions,” Mario Fiorino, VP legal and general counsel for the bureau, told Thompson’s.

“This decision reinforces the principle that insurance contracts must be interpreted as written, ensuring consistency, predictability and fairness for all policyholders.

“Clear coverage boundaries help preserve the long-term sustainability of the insurance system and highlight the importance of homeowners fully understanding their policy’s scope and limitations before a loss occurs.”

Farm Mutual Re, the Ontario Mutual Insurance Association and the Canadian Association of Mutual Insurance Companies also jointly intervened in the case in support of Trillium, which is a member of all three organizations, to present the mutual insurance sector’s perspective on how standard-form insurance contracts should be interpreted.

They said in a joint statement that the Supreme Court decision provides important certainty for insurers in policy design, underwriting and pricing.

“The outcome of this appeal is significant for our symbiotic mutual insurance ecosystem, which exists to provide security and resilience for our communities,” said Jean-Pierre Gagnon, president and CEO of Farm Mutual Re.

“This result will help prevent consumers from experiencing affordability challenges or losing certain coverages altogether.”

John Taylor, president of OMIA, noted that the mutual insurance industry requires certainty to develop and underwrite policies. He said the decision clarifies how endorsements, limits and exclusions operate together within a policy framework, reinforcing the principle that unambiguous policy wording should be applied as written.

“The Supreme Court of Canada’s ruling reinforces the legal principle that insurance contracts should be read as a whole where the contract language is unambiguous,” he said.

“When the law is clear, this provides certainty and reliability in what coverages are offered and how they are priced.”

CAMIC said its participation was tied to its mandate to support mutual insurers nationally and help ensure consistent interpretation of standard policy structures across jurisdictions.

“It was important for CAMIC, the leading and only national mutual insurance association in Canada, to intervene with Farm Mutual Re and OMIA given our mission to advocate for our members and strengthen their collective impact,” said Sangita Kamblé, president and CEO of CAMIC.

The mutual associations said the decision supports consistent underwriting and premium- setting by confirming that exclusions remain effective unless specifically displaced by endorsement wording, reducing uncertainty around claims exposure tied to regulatory compliance costs.

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