An insurer who intends to exclude coverage on the basis of arson must be able to prove arson with clear and cogent evidence

An insurer who intends to exclude coverage for fire liability on the basis that the fire was intentionally set must be able to prove the elements of arson with clear and cogent evidence.

Lancer Enterprises Ltd. v. Saskatchewan Government Insurance (c.o.b. SGI Canada), 2008 SKQB 346, Saskatchewan Court of Queen’s Bench, J.D. Koch J., September 4, 2008

The Plaintiff claimed for fire insurance coverage and consequential damages including damages for non-payment by the insurer.  The action pertained to a fire at a gas station owned by the Plaintiff.  The Defendant denied coverage on the basis that the station manager had deliberately set the fire.  In order to support its denial of coverage, the Defendant was required to prove the following elements of arson, each on a balance of probabilities:

(1) that the fire was incendiary, that is deliberately set, not the result of natural or accidental causes;

(2) that whoever is alleged to have deliberately set the fire had the opportunity to do so; it is not essential that the opportunity of the alleged perpetrator be exclusive;

(3) that there was motive on the part of the insured, or someone on behalf of the insured, to cause the fire.”

The court held that the Defendant had established, through clear and cogent evidence, the three elements of arson on a balance of probabilities.  The court found that the fire did not occur naturally, that the station manager had the only opportunity to set the fire, and that the insured’s precarious financial position provided the appropriate motive to start the fire and make a fraudulent insurance claim.  Therefore, the claim was dismissed.

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