Housing charity suing insurance providers over flood coverage

Once a five-storey apartment complex, the building at the corner of Scott Street and Athlone Avenue in Westboro now stands empty.

The building saw extensive damage after a sprinkler system burst and released nearly 20,000 litres of water in February 2023, displacing all 40 tenants. 

More than a year later, the supportive housing charity that owns the building said repairs are far from complete and blames its insurance providers.

"For nearly a year and a half, Intact Insurance has operated in bad faith, trying to bully and force us into taking millions less than we're rightfully owed," Ottawa Salus CEO and president Mark MacAulay said. 

The charity is now suing Intact along with Temple Insurance, Lloyd's and Liberty Mutual for up to $55 million, claiming they failed to sufficiently cover rebuilding costs. 

The money would be mostly for damages and restitution.

As of Wednesday, no statement of defence has been filed and none of the allegations have been tested in court. 

Charity facing monthly losses

MacAulay said the "first sign of trouble" came when the remediation company Intact selected for initial repairs left the building in a worse state, creating more delays. 

"It went from something that was a basic flood restoration into mould issues," he said. 

MacAulay said to actually restore the building, Salus would need $7.5 million from its insurance providers based on an assessment done by independent contractors. 

An assessment by Intact put the cost at $3.2 million, which Salus received, but MacAulay maintains that it's not enough to cover repairs. 

"All we're asking for is to bring the building back to its original state and make sure that it's at code," he said.

Though the building has been vacant for more than a year, Salus said it's still carrying mortgage, insurance, and maintenance costs, plus the loss in rent, which MacAulay said amounts to around $45,000 a month. 

According to Salus's statement of claim, the policy it took out under Intact should have covered those losses, but that policy was issued for a one-year term between July 1, 2022 to July 1, 2023. 

In a statement to CBC, Intact said it has have already provided Salus with multi-million dollar payments and is working closely with the charity to come to a resolution.

MacAulay fears one won't come soon enough. 

He said Salus had hoped to rebuild in time to house vulnerable low-income tenants by winter, but if construction on the building doesn't start within a month that won't be possible. 

"I'd like with all my heart to provide the affordable and supportive housing that our residents of Ottawa so desperately need," he said, "but here we are."

CBC reached out to the other three defendants. Liberty Mutual Insurance said it does not publicly discuss matters in litigation, Lloyd's said it wouldn't discuss matters in litigation or individual policies, and Temple Insurance has not yet replied.