Loss Caused by Intentional/Criminal Acts

Loss Caused by Intentional/Criminal Acts

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  Insurance policies often expressly exclude coverage for losses intentionally caused by the insured
  
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    Loss is intentionally caused where the insured takes action with the purpose of causing some loss or harm, even if the insured does not intend the extent of the loss actually incurred (Co-operative Fire & Casualty v. Saindon)
    
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      E.g. Emeneau v. Lombard Canada: insured tried to commit suicide in his car, car caught fire, exclusion clause applied to preclude recovery because it was an intentional act
      
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      Saindon: got in a fight with neighbour, tried to scare him with the lawnmower, which then fell on the neighbour- loss was intentional because the insured took action with the purpose of causing some harm, even if he did not intend the extent of the loss actually caused
      
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    Court should look for evidence of the insured’s subjective intent, failing which the court may apply a subjective-objective analysis based on the circumstances of the loss
    
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      Whether a reasonable person in the circumstances would have considered the conduct to result in that kind of outcome; whether a reasonable person would have thought that the resulting damage was something that was substantially certain to result from the conduct in question
      
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    Intent to injure presumed for inherently harmful conduct, e.g. sexual wrongdoing: Marine Underwriters, Lloyd’s of London v. Scalera; Sansalone v. Wawanesa Mutual Insurance
    
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  Common law: complete bar- no recovery
  
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    This had adverse consequences for 3^rd party victims and co-insureds
    
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      Scott v. Wawanesa: parents couldn’t recover from son’s conduct because he was an unnamed insured
      
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      Beck Estate v. Johnston: loss was caused by co-insured’s wrongdoing
      
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  Statutory modification: loss or damage from criminal conduct per se not a bar to indemnity- recovery is subject to policy terms
  
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    BCIA s. 5: “Unless a contract otherwise provides, a violation of a criminal or other law in force in British Columbia or elsewhere does not render unenforceable a claim for indemnity under the contract unless the violation is committed by the insured, or by another person with the consent of the insured, with intent to bring about loss or damage, except that in the case of a contract of life insurance this section applies only to insurance payable under the contract in the event the person whose life is insured becomes disabled as a result of bodily injury or disease”
    
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      Can recover as long as the conduct was not intended to bring about the harm- recovery permitted even if an action was criminal, so long as the resulting loss was not intended
      
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        But contract can provide otherwise- common law rule can be included in the contract and will be given effect
        
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    Ontario Insurance Act s. 118- similar provision
    
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  Intent to injure or cause harm required; excludes deliberate conduct causing unintended loss (RDF v. Co-operators General Insurance Co)
  

Eichmanis v. Wawanesa Mutual Insurance

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  Facts: Eichmanis was shot and injured but was 25% contributorily negligent- brought an action against the insurers of the shooter when the judgment went unsatisfied
  
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    Policy excludes coverage for bodily injury or property damage caused by any intentional or criminal act or failure to act by any person insured by the policy or any person at the direction of any person insured
    
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  Analysis:
  
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    S. 118 of the Ontario Insurance Act says that unless the contract provides otherwise, a contravention of any criminal or other law does not by that fact alone render unenforceable a claim for indemnity
    
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      But the contract does provide otherwise in this case- exclusion clause excludes coverage for losses resulting from criminal acts
      
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    The exclusion applies even without proof of intention to cause the injury or damage, so long as the act or omission that causes the harm is criminal in nature- includes all breaches of the Criminal Code regardless of whether mens rea was required
    
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      A conviction is not required, but if there is one it is prima facie proof of the fact
      
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  Held: exclusion clause triggered, no duty to defend
  

Erik Knutsen: “Why insurers should rethink criminal conduct exclusion”

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  Courts are too literalist and have failed to consider two fundamentals:
  
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    Insurers exclude “criminal” behavior from coverage to motivate policyholders to avoid definite, unfortuitous losses
    
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    Removing liability insurance for “criminal” behaviour removes a primary source of compensation for accident victims
    
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  The literalist construction of the exclusion ignores the sole purpose of the “criminal act” fortuity clause- to motivate insureds to control behaviour to avoid a definite, unfortuitous loss
  
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    By holding that insurance coverage is ousted on the commission of any criminal act, regardless of the insured’s subjective intent, the court transformed the fortuity clause into something more than it was meant to do
    
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    No matter how an insured adjusts her risky behaviour, if the behaviour which cause a loss can somehow be construed as a “crime”, coverage is ousted- but “crimes” can happen by accident, as was the case in Eichmanis. Then the behavioural deterrent effect of the clause is lost.
    
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    This interpretation also reads an exclusion clause broadly and against the interests of the insured, which goes against standard insurance contract interpretation principles
    
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  Solution: interpret the clause to require an insured to have the requisite subjective mental intent to bring about the ensuing unfortuitous loss- then the clause will achieve some mediating effect on fortuity
  

Directory: outlines
outlines -> Chabot College Fall 2010 Course Outline for Computer Application Systems 60 business software applications/general accounting
outlines -> Adil Khan Contracts Midterm outline- waldron
outlines -> Remedies for breach of promise (1) The Interests Protected
outlines -> Basic Process for Assessing Damages: 97 Select  interest that deserves vindication 97 a. Restitution 97
outlines -> Chapter Five: Written Documents 1 Unsigned Documents 1
outlines -> Cases and Materials on Contracts
outlines -> College of Science and Health
outlines -> Evidence outline
outlines -> 2. Act, Omission, Status or Circumstances 4 Consequences and Causation 8 Introduction to Mens Rea and Intent 10 Levels of Fault 11

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