Failure to Supervise Child falls within the "Failure to Act" Exclusion

Insured sued for damages to school caused by a fire started by the insured's son. Insured brought a third party claim against his insurer for indemnification under his homeowner's liability policy. Insure brought Motion for a determination of whether or not it owed the insured a duty to defend.

Motion allowed. No duty to defend found because the only allegations against the insured were for a failure to act and these allegations were specifically caught by the "intentional act" exclusion clause.

Durham District School Board v. Grodesky [2011] O.J. No. 3533, May 31, 2011, Ontario Superior Court of Justice, D.S. Gunsolus J.

The insured’s son was part of a group that allegedly caused a fire that caused damage to the Cartwright Central High School. The School Board commenced an action against, inter alia, the insured, alleging that he failed to act in terms of providing/enforcing a curfew, supervising, disciplining and instilling in the insured’s son a respect for private and public property.

The insured commenced a third party claim against the insurer for indemnification under his homeowner’s policy. The insurer denied coverage and indemnification on the basis that the allegations against the insured’s son fell under the following exclusion clause:

Exclusion Status Section II: We do not insure your claims arising from: (6) Bodily injury or property damage caused by any intentional or criminal act or failure to act by: (a) any person insured by this policy; or (b) any other person at the direction of any person insured by this policy.

The insurer brought a motion for a determination of an issue of law. Specifically, whether the insurer was required to defend the insured for the claims against him.

Counsel for the insured relied on RDF (Litigation Guardian of) v. Co-operators General Insurance Company, [2004] M.J. No. 382 (C.A.), and argued that in order to avoid a duty to defend the insurer had to establish that the insured’s son intended to set fire to the school.  Counsel for the insured submitted that the intention to light the fire was not necessarily the same as negligently allowing it to spread.

The Court declined to follow RDF (Litigation Guardian of) v. Co-operators General Insurance Company and further held that it did not address the issue of whether or not a parent of an alleged wrongdoer was covered under a policy of insurance.

With regard to the test that should be applied, the Court found that if an insured could demonstrate even a mere possibility that the claim could fall within the policy, then a prima facie duty to defend is established. The onus then falls on the insurer to negate the duty to defend by demonstrating that the claims fall outside the coverage due to a specific exclusion within the policy.

The Court found that the only allegations against the insured were for a failure to act. Such allegations were specifically caught by the above-noted exclusion clause. As a result, the insurer did not owe a duty to defend and the insured’s third party action was dismissed.

This case was digested by Aaron D. Atkinson 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 aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com.

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