An insured was not entitled to fire insurance when his psychotic son set fire to his house.

Mr. Darch set fire to his parents' home resulting in the total destruction of the premises. He was charged with arson but found "not criminally responsible" for the offence in the criminal proceedings. The home was insured by the defendant insurance company. The insureds submitted a proof of loss regarding the fire and were denied coverage on the basis that the loss was excluded under the policy. At issue was whether the intentional act exclusion in the insurance policy applied such that the defendant insurer was not required to compensate the plaintiffs for the losses. The court found that the exclusionary provisions applied and that the defendant insurer was not required to compensate the plaintiffs.

Darch Estate v. Farmers' Mutual Insurance Co. [2011] O.J. No. 2971, June 13, 2011, Ontario Superior Court of Justice, M.L. Lack J.

The insureds' son, Donald Darch, suffered from mental illness. He had resided in the insureds' home for several years but was asked to make arrangements to find alternative residence in January 2005. Mr. Darch burned down the insureds' residence shortly after this request was made.

The insureds notified the defendant insurer of the loss and submitted a proof of loss shortly thereafter. The defendant insurer denied coverage on the basis that the loss for damage was excluded under the policy. The insureds' estate commenced an action claiming damages for breach of contract and failing to honour a fire claim submitted under the policy of insurance.

The insurance policy provided that it would not "insure loss or damage caused by or resulting from wrongful conversion, secretion, intentional, willful, criminal acts, infidelity or any other dishonest act or omission by you, your tenants, employees or other persons to whom the property insured may be loaned, rented or entrusted (carriers for hire excepted)." "You" was defined to mean "the person(s) named as insured on the Policy Declaration page(s) and, while living in the same household, his or her spouse, relatives of either or any person under the age of 21 in their care."

The court held that the issues were whether the exclusion clause in the policy applied, whether Donald Darch was an "insured" as defined in the policy and whether the fire loss was the result of an act excluded under the policy.

The court interpreted the policy to exclude any "intentional act, willful act or criminal act." The court concluded that if Donald Darch's act in burning down the house was an intentional act the policy would exclude coverage for loss or damage.

The court held that the test for determining whether an individual suffering from a mental disorder is not responsible for his tortuous act in a civil case is a different test from the s. 16 Criminal Code test for lack of criminal responsibility. The court quoted Gergis v. Rose (Guardian ad litem of), [1979] OJ No. 40 (Ont. H. C. J.) wherein it was found that the test in a civil proceeding is: was the defendant able to appreciate the nature and consequence of his act? The court held that the test in the civil proceedings is whether Mr. Darch appreciated the nature and consequences of his act, in the sense that he knew the physical aspects of what he was doing and knew what would follow from them.

In the criminal proceedings, Donald Darch was found not criminally responsible for the arson charges. A forensic psychiatrist testified that Mr. Darch suffered from a psychotic disorder, a substance abuse problem and potentially a brain injury. He concluded that Mr. Darch was certifiable under the Mental Health Act. In his report, he stated that Mr. Darch was "unable to appreciate the nature and quality of his actions."

A second psychiatrist testified that Mr. Darch's mental illness did not rob him of the ability to understand that his actions were directed towards starting a fire. The second psychiatrist concluded that Mr. Darch's mental illness did not prevent him from understanding that there was an extremely high likelihood that a fire would result or knowing the foreseeable destructive consequences of said fire.

The court heard and accepted evidence that Donald Darch got the gasoline, poured the gasoline and lit matches and knew that he was setting the house on fire. The court agreed that it was Mr. Darch's intent when he took those steps to burn down the house. The court held that there was no evidence at the time that he set the fire that Mr. Darch was under any delusion that prevented him from realizing that he was setting a fire and the result of his actions would be that the house would burn down. As such, the court concluded that the fire was caused by the intentional act of Donald Darch and that the intentional act exclusion applied such that coverage for the loss was excluded.

This case was digested by Katherine E. Linton and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at klinton@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com

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Comments (2) Read through and enter the discussion with the form at the end
Janet Woods - September 29, 2011 1:50 PM

Yes, it is very sad and wrong, but it is stipulated in the contract.

"The insurance policy provided that it would not "insure loss or damage caused by or resulting from wrongful conversion, secretion, intentional, willful, criminal acts, infidelity or any other dishonest act or omission by you, your tenants, employees or other persons to whom the property insured may be loaned, rented or entrusted (carriers for hire excepted)." "You" was defined to mean "the person(s) named as insured on the Policy Declaration page(s) and, while living in the same household, his or her spouse, relatives of either or any person under the age of 21 in their care."

I don't think there is anything anyone can do. Sad. Very sad.

Maggie Theodore - October 14, 2011 7:42 AM

Why wasnt the Innocent Insured Clause used as a defense in this case?

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