Client Update – Protecting the innocent in property insurance: recent amendments to Nova Scotia’s Insurance Act limit “criminal or intentional act” exclusion clauses
Recent amendments to the Nova Scotia Insurance Act are designed “to protect the financial interests of an innocent person when the person’s property is damaged by another person with whom that person shares an insurance policy.”1 The consequences of domestic violence provide the backdrop for these amendments, which came into force on April 18, 2018. The amendments apply to property insurance policies and will primarily impact homeowners’ policies.
As a result of the amendments, policies can no longer exclude coverage for an innocent insured who experiences property loss or damage as a result of their co-insured’s criminal or intentional wrongdoing.
When she announced these amendments to the Insurance Act, Finance Minister Karen Casey noted that they would especially assist women, who are “disproportionately” affected by domestic violence and may suffer property loss or damage at their home as a result.
Nova Scotia is one of several Canadian provinces — including New Brunswick — that have made similar amendments to their insurance legislation.2
Going forward, Nova Scotia property policies will be interpreted in accordance with the new section 13A of the Insurance Act, regardless of how the policy’s exclusion clause governing criminal and intentional acts is worded.
The new section 13A of the Insurance Act provides:
13A (1) Where 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
(a) whose act or omission caused the loss or damage;
(b) who abetted or colluded in the act or omission;
(i) consented to the act or omission, and
(ii) knew or ought to have known that the act or omission would cause the loss or damage; or
(d) who is not a natural person.
(2) Nothing in subsection (1) allows a person whose property is insured under the contract to recover more than the person’s proportionate interest in the lost or damaged property.
(3) A person whose coverage would be excluded but for subsection (1) shall
(a) co-operate with the insurer in respect of the investigation of the loss, including submitting to an examination under oath if requested by the insurer;
(b) in addition to producing any documents required by the contract, produce for examination, at a reasonable place and time specified by the insurer, all documents in the person’s possession or control that relate to the loss; and
(c) comply with any other requirement prescribed by the regulations.
NOTE: This update provides general information only and is not intended to offer legal advice. If you have specific questions about how the amendments might affect you, please contact the head of our firm-wide Insurance Defence Practice Group, Shelley Wood; Tyana Caplan; or any of Stewart McKelvey’s insurance lawyers in Nova Scotia.
1See the Explanatory Note to Bill 106, as well as “Amendments to the Insurance Act Protect Nova Scotians” (March 29, 2018).
2Donalee Moulton, “New Brunswick amends Insurance Act to better protect victims of domestic violence” in The Lawyer’s Daily (December 27, 2017).
3Insurance Act, RSNS 1989, c 231, as amended by SNS 2018, c 12 (Bill 106). The amendments have not yet been consolidated into the online version of the Insurance Act.
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