Court finds insured not entitled to liability coverage under homeowner’s policy in circumstances where insured’s criminal negligence caused fire that resulted in injury to third party as policy excluded coverage for criminal acts, whether intentional or not

The insured sought coverage under his homeowner’s policy for a claim for bodily injury brought by a third party. The third party was injured in a fire that was ignited while the insured was making cannabis oil. The insurer argued that the insured was not entitled to liability coverage as the policy included an exclusion for losses caused by a criminal act. The insured was charged criminally in respect of the fire and ensuing bodily injury to the third party, and he pleaded guilty to a Criminal Code offence grounded in negligence. The court found for the insurer and held that the exclusion applied as the language of the policy was unambiguous and the insured’s intentions were irrelevant.

Insurance law – Homeowner’s insurance – Exclusions – Criminal offences – Intentional acts – Bodily injury

McGregor v. Wawanesa Mutual Insurance Co., [2025] A.J. No. 419, Alberta Court of King’s Bench, April 14, 2025, B.B. Johnston J.

The insured had a homeowner’s policy that included an exclusion for bodily injury “caused by any intentional or criminal act … by any persons insured by [the] policy”.

The insured was making cannabis oil in his garage and the use of butane in that process caused a fire to ignite (the “Fire”). The insured and two visitors were seriously injured because of the Fire. The insured pleaded guilty to two Criminal Code offences, including that he did cause a fire or explosion that caused bodily harm “as a result of a marked departure from the standard of care that a reasonably prudent person would use to prevent or control the spread of fires or to prevent explosions” contrary to s. 436(1) of the Criminal Code of Canada.

One of the visitors brought a claim against the insured for damages in respect of his injuries (the “Injury Claim”). The insurer defended the Injury Claim pursuant to a reservation of rights. The insured brought a summary trial seeking a declaration of coverage with respect to the Injury Claim. The insurer sought to have the action dismissed on the basis that the insured was not entitled to a defence to or indemnity for the Injury Action, as the Policy contained an exclusion clause for bodily injury “caused by any intentional or criminal act…by any person insured by this policy…”

The insured argued that the words “criminal act” in the exclusion were ambiguous and that the insurer was required to establish that the insured subjectively intended to cause the loss by the criminal act for the exclusion to apply. The insured argued that the Supreme Court of Canada decision in Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, which held that the exclusion required an intent to injure on the part of the insured, was not limited to the intentional act exclusion but should also be applied to the criminal act exclusion.

The insurer argued that the “criminal act” exclusion was not ambiguous and that it applied regardless of the insured’s intent. 

The court found that the language of the criminal act exclusion was clear and was not contingent on intentionality. The court concluded that the language of the Policy was disjunctive and that an act of the insured that causes injury is clearly excluded when it is either an intentional act, or a criminal act.

This case was digested by Tricia M. Milne and edited by Steven W. Abramson of Harper Grey LLP and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].