The Insurers of a fish plant were unable to prove that the fire which destroyed the plant was arson nor that the Insured had committed any acts which would vitiate the policies. The Insured was therefore entitled to the damages proven. The Insurer’s conduct, however, did not warrant an award of punitive damages.

19. November 2003 0

Bay Bulls Sea Products Ltd. v. Insurance Corp. of Newfoundland Ltd., [2003] N.J. No. 282, Newfoundland and Labrador Supreme Court – Trial Division

A fish plant belonging to the Plaintiff Insured was destroyed by fire in December 1995. The plant and its contents were insured under two policies, one covering the stock and another covering the building and equipment.

The Insurers denied coverage. The stock Insurer claimed the owners of the Insured or persons acting on their behalf committed arson to collect on the insurance money. They also relied on several alleged policy violations by the Insured which served to vitiate the policy, as did the building and equipment insurers.

With respect to the claim under the stock policy, the defence of arson advanced by the stock Insurers failed as they did not prove to a high degree of probability that the fire was incendiary nor did they eliminate all reasonably probable causes for the fire other than arson. The court also held that the Insured did not violate the policy in any way which warranted vitiating the policy.

With respect to the claim under the building and equipment policy, the defence of breach of policy was unsuccessful, since, any violations were more technical than substantial.

The Insured was therefore entitled to the damages proven. The Insured’s claim for general damages, aggravated damages and punitive damages was dismissed. The Court held that the Insurer’s actions did not reach the exceptional level required for such an award.

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