In January 2026 the Supreme Court of Canada dismissed a joint homeowners’ appeal and held that a standard exclusion of increased costs due to operation of any law remained fully operative despite a “Guaranteed Rebuilding Cost Coverage” (GRC) endorsement to the policy. The court found the policy wording unambiguous and determined that the GCR endorsement, which provided for rebuilding by using “current building techniques”, removed the policy limit but did not override exclusions. As a result, increased costs arising from conservation compliance requirements were excluded.
The appellants jointly owned a home on the Ottawa River which was destroyed in a 2019 flood. Their property was situated within the jurisdiction of the Mississippi Valley Conservation Authority which required the rebuild to comply with extensive regulatory requirements, including upgrades to the home unrelated to the damage itself. These requirements significantly increased rebuilding costs. Despite the appellants having purchased a high-end policy that included the GRC endorsement, The insurer declined to pay the compliance‑driven increases, relying on the base‑policy exclusion which did not cover increased costs of repair or replacement due to the operation of any law. The homeowners argued that the endorsement guaranteed a full rebuild and that the exclusion should not restrict what they understood to be comprehensive coverage.
The court reaffirmed that endorsements formed part of the policy and amended it only to the extent stated. The GRC endorsement on this specific policy expressly amended only the basis of claim payment provision. Further, the endorsement concluded with a statement that “in all other respects, the policy provisions and limits of liability remain unchanged,” thus leaving the exclusions in place.
The court concluded that the phrase “increased costs…due to operation of any law,” had a singular and unambiguous meaning: it applies to all increases attributable to legal requirements in force at the time of the loss. The homeowners argued that the endorsement’s reference to rebuilding with “current building techniques” implied that the insurer was required to fund compliance with all current legal standards. The court rejected this argument and stated that the endorsement refers to construction methods and not legal compliance obligations. The GRC endorsement remained meaningful because it allowed the insured to recover replacement costs exceeding the declared policy limit.
The court found that exclusions limit an endorsement unless expressly stated otherwise.