Significant fire damage, particularly resulting in the loss of your home or business, is a very traumatic and life-changing experience for most people. A house fire can not only result in a loss of material goods, many of which have sentimental and irreplaceable value, as well as financial records, photos and many other valuable items, but it also often means you must find another place to live for an indefinite period. Further, many Canadians don’t have the funds to pay to live elsewhere for a long period, if their insurance company doesn’t promptly pay their fire loss claim.
The loss of your business due to fire has similarly challenging ramifications, not the least of which is that you no longer have a place to work and earn an income. And, for some businesses, it may take years to re-build clientele even after the fire damage is repaired or the building is replaced.
Fire loss damage claims can be complicated and insurers will only pay what they really have to pay, given the terms of the contract. At Stevenson Whelton MacDonald & Swan, our fire loss claims lawyers have navigated many fire loss and water damage claims for our clients and we provide the experience needed to get you the maximum settlement you deserve. Further, many of our clients have stated that it’s a relief to know that they have an experienced legal expert representing them against the insurance company, while they’re dealing with the many other issues that arise after a fire.
Insurance policies generally include an exclusionary term which prohibits coverage for loss or damage that results from a criminal or intentional act, or a failure to act, by anyone insured by the policy, or for fires resulting from vandalism or a malicious act by anyone residing in the home. This means, for example, that an insured person is excluded from coverage if they committed arson and intentionally set fire to the home.
Unfortunately, Ontario is one of a few provinces in Canada where an innocent co-insured is currently not entitled by law to receive a settlement from a fire loss claim. In Ontario, if a co-owner of the property, including a spouse or partner, intentionally started a fire then the other co-owner is excluded from coverage, even if they had no knowledge of the perpetrator’s actions. And, sometimes insurance companies unfairly challenge a fire loss claim, alleging that the fire was purposely started by a family member. In such a case, you need a strong and experienced lawyer to fight for your right to coverage.
Ontario’s failure to protect innocent co-insureds has resulted in, what many of us feel are, morally unjust judgements and critics have urged policymakers to adopt a change in insurance law to prevent exclusion of innocent co-insureds.
In the case, Scott v. Wawanesa Mutual Insurance Co.(1989), the Supreme Court of Canada ruled that a couple, Mr. and Mrs. Scott, were not entitled to be indemnified under their home insurance policy after their 15-year-old son intentionally set fire to their home. The son was considered to be ‘insured’ under the policy and accordingly, the Intentional Act Exclusion could be applied in denying coverage to his parents.
Soczek v. Allstate Insurance Co. (2017) is another case involving a home fire that was set intentionally by a family member and as a result, fire claim coverage was denied to a co-insured. This case involved a husband who poured gasoline on his wife and lit her on fire, and the fire caused substantial damage to their shared Collingwood home. Mrs. Soczek sustained serious injuries and after the fire, spent nine weeks in a coma, and her husband was found guilty of attempted murder. In a separate civil action which arose when Allstate denied her claim, the judge ruled that, although Allstate’s actions were “less than admirable”, under Ontario law Mrs. Soczek must be denied coverage because her homeowner policy was voided when her husband intentionally started the fire. After this story was reported by CBC in April 2017, Allstate made a settlement offer to Mrs. Soczek.
Bill 175: Innocent Persons Insurance Recovery Act was introduced to the Ontario legislature in December 2017, to amend the Insurance Act so that innocent persons are not prevented from recovering losses or damages when actions were caused by another person, but this law has not yet been enacted.
Incidents involving fires that were intentionally started by a co-insured are fortunately quite rare; however, there are other circumstances which can also impact whether you are entitled to insurance in the event of a fire. It’s a good idea to make yourself familiar with the terms of your insurance policy, so that you understand your legal rights and, in some cases, you may elect to have additional coverage where desired.