Personal Responsibility for Intentional Conduct: Protecting the Interests of Innocent Co-Insureds Under Insurance Contracts

Abstract

An insured who wilfully damages insured property cannot seek indemnification under an insurance policy because the loss was not a fortuitous one and likely falls within an exclusion clause in the policy. This has historically been referred to as the criminal forfeiture principle, which holds that for public policy reasons a wrongdoer should not be able to benefit from his or her own wrongdoing. The question in situations like this is whether an innocent co-insured should also be barred from recovery for such loss. This article focuses on developments in the law relating to recovery by an innocent co-insured — namely amendments to the British Columbia Insurance Act. The author explores the history of the criminal forfeiture principle and also examines the modern contractual approach to interpreting insurance contracts. This article argues that the modern approach emphasizes property and contract law principles at the expense of protecting the reasonable expectations of an innocent co-insured. The author then examines a key provision in the British Columbia Insurance Act that intends to provide statutory protection for an innocent co-insured. Despite some disadvantages, the author argues that the benefits of the statutory protection outweigh any potential weaknesses.