VII. PUBLIC POLICY RESTRICTIONS

VII. PUBLIC POLICY RESTRICTIONS

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  BCIA s. 35:
  
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    (1) Despite section 5, if a contract contains a term or condition excluding coverage for loss or damage to property caused by a criminal or intentional act or omission of an insured or any other person, the exclusion applies only to the claim of a person
    
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      (a) whose act or omission caused the loss or damage,
      
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      (b) who abetted or colluded in the act or omission,
      
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      (c) who
      
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        (i) consented to the act or omission, and
        
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        (ii) knew or ought to have known that the act or omission would cause the loss or damage, or
        
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      (d) who is in a class prescribed by regulation.
      
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    (2) Nothing in subsection (1) allows a person whose property is insured under the contract to recover more than their proportionate interest in the lost or damaged property.
    
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    (3) A person whose coverage under a contract would be excluded but for subsection (1) must comply with any requirements prescribed by regulation.
    
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    Indemnification for innocent co-insured’s proportionate share in subject property- nature of innocent co-insured’s interest in property irrelevant
    
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    Intentional/criminal conduct exclusion limited to persons implicated in wrongdoing or prescribed by regulation
    
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    Protects victims of domestic violence
    
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    Note: limited to property damage or loss; does not include indemnification for bodily injury or death
    
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  BC Reg 114/2013 s. 7
  
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    (1)  For the purposes of section 35 (1) (d) [recovery by innocent persons] of the Act, all classes of persons other than natural persons are prescribed.
    
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    (2) For the purposes of section 35 (3) of the Act, a person described by that provision must co-operate with the insurer in respect of the investigation of the loss, including, without limitation,
    
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      (a) by submitting to an examination under oath, if requested by the insurer, and
      
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      (b) by producing, for examination at a reasonable time and place designated by the insurer, documents specified by the insurer that relate to the loss.
      
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  BCI(V)A s. 76(6)
  
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    The following do not prejudice the right of a person entitled under subsection (2) to have the insurance money applied toward the person's judgment or settlement, and are not available to the insurer as a defence to an action under subsection (3):
    
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      (c) contravention of the Criminal Code or of a law or statute of any province, state or country by the owner, lessee or driver of the vehicle specified in the owner's certificate or policy.
      
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  Where an insurance contract provides coverage for a particular loss, payment of the insurance proceeds may nonetheless be prohibited by public policy
  
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    Courts rely on public policy to nullify the operation of a contract where completion of the contract would violate the social or moral values of society- public policy will always trump contractual terms
    

Criminal Acts

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  Common law: a criminal should not benefit from his crime (criminal forfeiture principle)
  
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    Extends to the criminal’s estate and to anyone claiming through the estate
    
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      But some courts have suggested in obiter that this should be reformed because of the inherent unfairness of allowing a named beneficiary to recover, but not the insured’s estate- this distinction seems arbitrary
      
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        As a matter of law, a criminal’s estate stands in the shoes of the criminal, but a beneficiary under an insurance policy does not
        
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  Statutory modification: BCIA s. 5 restricts the application of the criminal forfeiture rule to circumstances in which the insured commits a criminal act with the intention of bringing about a loss
  
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    Exceptions:
    
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      Loss or damage caused by insured or 3^rd party with insured’s consent intended to cause loss
      
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      Contractual terms can override statutory provision (BCIA s. 5)
      
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      Life insurance: criminal forfeiture applies, except to insurance payable under the contract in the event that the person whose life is insured becomes disabled from bodily injury or disease
      
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  Public policy rules are not constrained by contractual terms
  
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    An insurance contract designed to cover illegal activity is unenforceable
    
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    Public policy considerations do not impact the legal status of the contract so as to render it void or invalid- they simply render it unenforceable on moral grounds
    
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      Particular claim fails and insurer is excused from contractual obligation, but contract remains valid
      
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    But the need to resort to public policy can be avoided by a well-drafted contract
    
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    Reliance on public policy is necessary where the contract is silent on the issue
    

Oldfield v. Transamerica and Goulet v. Transamerica (SCC 2002)

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  Oldfield was insured under a life insurance policy naming his wife as the beneficiary, died of a heart attack when a cocaine-filled condom in his stomach unexpectedly ruptured
  
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  Goulet had life insurance naming his wife as a beneficiary and died when a car bomb he was planting unexpectedly exploded
  
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  Insurer in both cases argued that payment of insurance proceeds would violate the criminal forfeiture principle
  
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  SCC held in both cases that public policy did not prohibit payment- the beneficiaries were not participants in the criminal acts in question- payment to them did not benefit the guilty insureds
  

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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