On an appeal about a homeowners’ policy with a Guaranteed Rebuilding Cost endorsement, the Supreme Court held that the endorsement did not override the policy’s exclusion for increased costs of complying with “any law” or public authority requirements. Reading the contract as a whole and applying the usual coverage, exclusion, then exception sequence, the Court found the compliance cost exclusion unambiguously applied, with the insureds limited to the policy’s $10,000 exception for by-law or code compliance.
The Court also rejected the argument that enforcing the exclusion nullified the GRC endorsement, since the endorsement still delivered its core benefit by allowing replacement cost recovery above the policy limit, subject to exclusions.