Singer Kwinter’s case has prompted Ontario to change its law on innocent co-insureds in standard home insurance policies.
In Soczek v. Allstate, 2017 ONSC 2262, a woman sustained serious burns after her husband tried to hill her by pouring gasoline on her and lighting her on fire in the couple’s home. Her insurer, Allstate, subsequently refused to pay for the fire damage to the home on the basis of an exclusion clause found in standard home insurance policies. The clause –which was interpreted by the Supreme Court of Canada back in 1989 — allowed Allstate to deny coverage on the basis of intentional and criminal acts committed by the woman’s husband, who was considered a co-insured under the couple’s policy.
Although the Court ultimately had to dismiss the wife’s claim on the basis of the exclusion clause, Justice Morgan heavily criticized the insurer for continuing to interpret its policies in a way that was unfair to innocent co-insured parties. He noted that “[s]everal provinces have intervened to protect innocent co-insureds and have legislated this type of exclusionary clause out of existence. And yet, Allstate continues to capitalize on it in those jurisdictions that have not seen fit to extend legislative protection to an innocent consumer such as the Plaintiff. This case graphically illustrates the compounding of injuries that Allstate’s policy imposes on victims of domestic violence.”
Following the Court’s decision in Soczek, the Insurance Bureau of Canada (IBC) requested that insurers providing home insurance policies voluntarily extend coverage in favour of innocent co-insureds.
More recently, Ontario also passed a law to change section 129.1 of the Insurance Act, R.S.O. 1990, c. I.8. The change was designed to provide innocent co-insureds coverage in cases where a loss or damage is caused by the intentional or criminal act of another person. The amendment has been in force since April 30, 2018, and now reads as follows:
Recovery by innocent persons
129.1 If a contract contains a term or condition excluding coverage for loss or damage to property caused by a criminal or intentional act or omission of an insured or any other person, the exclusion applies only to the claim of a person,
(a) whose act or omission caused the loss or damage;
(b) who abetted or colluded in the act or omission;
(i) consented to the act or omission, and
(ii) knew or ought to have known that the act or omission would cause the loss or damage; or
(d) who is in a class prescribed by the regulations. 2017, c. 34, Sched. 21, s. 13.
Recovery limited to proportionate interest
(2) Nothing in subsection (1) allows a person whose property is insured under the contract to recover more than the person’s proportionate interest in the lost or damaged property. 2017, c. 34, Sched. 21, s. 13.
Compliance with prescribed requirements
(3) A person whose coverage under a contract would be excluded but for subsection (1) must comply with the requirements prescribed by the regulations. 2017, c. 34, Sched. 21, s. 13.