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In our Insurance Bulletin on the B.C. Insurance Amendment Act,
2009, we noted that many policies excluded loss or damage,
including fire, caused by vandalism or malicious act while the
property was vacant and that such exclusions would no longer be
permitted in the future. A careful reader of our Bulletin has
brought it to our attention that this interpretation is not
correct.
Pursuant to s. 28.4 of the Act, an insurer must not provide in a
contract that includes coverage for loss or damage by fire, an
exclusion that is not permitted by the regulations. On a careful
reading of the regulations, we stand corrected and exclusions for
fire caused by malicious acts or vandalism while the property is
vacant for more than 30 days will still be permissible.
The regulations relating to fire exclusions read in their
entirety as follows:
Fire exclusions
6 (1) For the purposes of section 28.4(1) of the Act, an insurer
may provide in a contract that includes coverage for loss or damage
by fire an exclusion for fire or explosion caused by
subject to section 28.6 of the Act, a criminal act or omission,
or an act or omission of the insured or a person having an
insurable interest in the subject of the insurance, which act or
omission was intended to bring about the loss or damage or
riot, civil commotion, war, invasion, act of a foreign enemy,
hostilities, whether war is declared or not, civil war, rebellion,
revolution, insurrection or military power.
(2) For the purposes of section 28.4(1) of the Act, an insurer
may provide in a contract that includes coverage for loss or damage
by fire an exclusion for fire or explosion caused by terrorism but
only as the contract applies to property that is not used for
residential purposes.
(3) or the purposes of section 28.4(2) of the Act, except as
authorized under subsections (1) and (2) of this section, an
insurer may not provide in a contract that provides coverage for
loss or damage by fire an exclusion for loss or damage by fire that
occurs when the insured property is vacant for a period not longer
than 30 days.
Some of the confusion on this topic arose from the Insurance Act
Review Discussion Paper issued by the Ministry of Finance in March
2007. At that time, the Ministry noted that there was a series of
cases that held that where fire arose from vandalism, the losses
were excluded under the vandalism/vacancy exclusion clause. The
Ministry was then of the view that "these cases undermine a
core policy goal of the legislation: that fire coverage includes
fire resulting from any cause, except causes that are specifically
listed in the policy or the act. These cases may result in
unexpected and unfair consequences for consumers. . . " In any
event, the regulations, as they presently exist, continue to allow
exclusions for a "criminal act or omission . . . which act was
intended to bring about the loss or damage". This would
therefore include vandalism or malicious acts intended to result in
a destructive fire to the premises.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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