A string of disturbing cases has highlighted a troubling trend of injustice for Ontario homeowners who are victims of arson.
After a heated argument, a Collingwood woman told her husband that their marriage was over. In response, he set fire to their bedroom, causing $160,000 in damage to the house. Thankfully, no one was hurt.
When she attempted to claim her insurance coverage to pay for repair costs to her home, her claim was denied. Allstate had placed an exclusion in the policy which prevented claims resulting from intentional or criminal acts of any homeowner. Because her husband was covered under the same policy, his act of arson nullified the homeowners’ insurance for his innocent wife.
A similar case was recently brought to the Ontario Superior Court of Justice, involving a Toronto man who set fire to his spouse of 32 years in an act of attempted murder. After nine weeks in a coma and undergoing 30 surgeries, she was devastated to learn that flames from her burning body had spread and damaged the lower level of their house.
Allstate denied her insurance claim on the basis of the same exclusion – because her husband was a mutual homeowner, his crimes rendered their policy void. Forced to respect the terms of the policy, the court overseeing the insurance claim ruled against the homeowner. In addition to denying the claim, Allstate wanted to have its legal fees paid by the claimant – the court refused.
The Punishment for Innocence
A basic tenet of public policy is that innocent people ought not to be punished for crimes they did not commit. While wrongdoers should not be able to benefit from their actions, the intentional and criminal acts exclusions contained in many Ontario homeowners’ insurance policies go too far and further victimize survivors of domestic abuse.
This issue reached the Supreme Court of Canada in 1989 in the case of Scott v. Wawanesa. The Scotts’ 15-year-old son set fire to their family home and their claim was denied by their insurer. By the narrowest of margins – four judges in favour and three opposed the court held that the terms were clear and binding on the parties denying the insureds claim. The minority view of Justice LaForest was that the application of this exclusion was unfair and unreasonable. A “modern approach” proposed by the minority was to treat each insured’s interest as being several and not joint under the policy.
And yet for nearly 30 years, insurers have continued to insert such exclusions into their policies. Governments have been slow to amend Insurance Acts and courts have been hesitant to follow the Supreme Court’s minority opinion in the Scott case. As a result, many claims have continued to be denied for innocent victims.
Resolutions for Victims of Arson
Several provinces across Canada have amended their Insurance Acts to prevent insurers from denying the claims of innocent victims. BC and Alberta have both updated their Insurance Acts over the past few years, while Saskatchewan’s is set to be updated in 2018.
In Ontario, as a direct result of reporting by the CBC, a private member’s bill was passed at first reading to amend the Ontario Insurance Act. Liberal MPP Mike Colle introduced the Innocent Persons Insurance Recovery Act in late April. It remains to be seen whether the government will pass this bill to protect innocent homeowners.
More recently, the Insurance Bureau of Canada (IBC) has requested that its insurers honour these claims. The IBC has asked that its members providing home insurance in Ontario and Atlantic Canada to voluntarily align their policies with other jurisdictions.
While homeowners rely on insurance to protect us when we are victims of a wrongful act – like arson – insurers continue to take advantage of consumers by placing these exclusions in their policies.
This post originally appeared on Ontario Trial Lawyers Association Blog on June 08, 2017.