An insured acquitted of arson in criminal proceedings can still have his entitlement to insurance proceeds voided by allegations of arson

Insurer established Insured committed arson thereby depriving Insured recovery under the policy.

Performance Factory Inc. v. Atlantic Insurance Co. Limited, [2010] N.J. No. 78 (S.C), March 3, 2010, Newfoundland and Labrador Supreme Court – Trial Division, R.P. Whalen J.

The Plaintiff Insured operated a recreational vehicle dealership and had its building and contents insured against loss by fire under a policy of insurance with the Defendant.  In the late hours of October 19 and early hours of October 20, 2000, a fire destroyed the property of the Insured.  The Insurer denied coverage alleging that the principal of the Insured, together with his father, deliberately started the fire with the intention of making a claim against the insurance provided by the Insurer.  The principal and his father were charged criminally with committing arson with the intent of defrauding the Insurer.  The Crown proceeded to trial against the father of the principal, who was acquitted and the Crown withdrew the charge against the principal.

The issue before the Court was whether the Insurer had established the defence of arson thereby depriving the Insured of recovery under the policy.  The Court found that the Insurer had established on a balance of probabilities that the principal of the Insured and his father had intentionally started the fire.  Circumstantial and conflicting evidence at trial did not offer another cause of the fire.  As a result the Insured’s action was dismissed.

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

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