An arsonist who burns down his house may be entitled to the insurance proceeds if he is insane

Whether the criminal-act exclusion applies in the context of an insured who is found not criminally responsible by reason of mental disorder is an issue that must be settled upon a full factual record at trial.  Mcleans wrote an interesting article on this decision: Who pays if the arsonist is insane?  This case was also digest by the Canadian Does criminal act exclusion apply to a person found not criminally responsible for a house fire?

Cipkar v. RBC General Insurance Co., [2008] O.J. No. 1974, Ontario Superior Court of Justice, L. A. Pattillo, J., May 21, 2008

A serious fire took place at the home of the plaintiff insured and her husband.  The fire was started by the insured’s husband, who died as a result of injuries he suffered from it.

The insured made a fire loss claim pursuant to her home owner’s insurance policy issued by the defendant insurer for the damages occasioned by the fire.  The insurer denied coverage on the basis that the policy specifically excluded the loss from coverage because the insured’s husband was a named insured under the policy and had set the fire.  The insured commenced this action against RBC for breach of the policy and the insurer brought a motion for summary judgment seeking an order dismissing the action on the ground that there is no serious issue for trial.

The exclusion clause in issue provides as follows:

“We do not insure loss or damage to your property that is caused by . . . your intentional acts, your criminal acts, your failure to act, or the intentional acts or failure to act by any other person under your direction…  This exclusion applies to all persons insured under this policy, even though the intentional/criminal act is by only one or more of the other persons insured under this policy.”

On the motion, the insurer relied only on that part of the exclusion referring to criminal acts; conceding that it could not obtain summary judgment on the basis of the exclusion insofar as it relates to intentional acts having regard to the insured’s expert evidence.  The insurer submitted that the words “criminal act” do not require proof of intent, citing Eichmanis v. Wawanesa Mutual Insurance Company (2007), 84 O.R. (3d) 668. The insured’s husband died before criminal charges were laid.  The insured filed expert reports in which the experts deposed that had her husband been charged criminally for the fire, it was more likely than not that he would have been found not guilty by reason of insanity.

The court held that on the facts of this case, intention was not the issue.  Rather, it was whether the exclusion clause would apply if the insured could establish on the evidence at trial that at the time her husband set the fire, he did not appreciate the nature and quality of his act.  Notwithstanding that under the criminal law a person who is found not criminally responsible on account of a mental disorder has still committed a criminal act, the question remains whether such an act would constitute a criminal act within the meaning of the exclusion in the policy.

The court noted that the Ontario Court of Appeal has made it clear that matters of law which have not been fully settled should not be disposed of in interlocutory proceedings and particularly on summary judgment motions.  Rather, they should only be settled upon a full factual record.  The court held that the issue raised in this case was both novel and significant and therefore required both a consideration of factual issues and an interpretive analysis of the policy.  Accordingly the insurer’s motion for summary judgment was dismissed.

This case was originally summarized by Cameron D. Elder and originally edited by David W. Pilley.

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