Insurance Business IBC tells members to protect innocent co-insureds

Pressure is mounting on insurance companies in Ontario, and now in Atlantic Canada, to protect innocent co-insureds.

The Insurance Bureau of Canada’s Board of Directors has recommended its members “voluntarily align their home insurance policies” with the provinces that already have legislation safeguarding innocent co-insureds.

What that means is if one person on a policy commits an intentional or criminal act invalidating the policy, but the other co-insured is found innocent of that act, then insurance companies are compelled to pay the co-insured’s share of the policy.

The announcement comes following a bill being placed before the Ontario legislature that would legally mandate insurance companies to indemnify innocent co-insureds, as well as the Insurance Brokers’ Association of Ontario supporting the bill.

“We are recommending to members providing home insurance in Ontario and Atlantic Canada to voluntarily align their policies with other jurisdictions when it comes to offering coverage for innocent co-insureds,” Steve Kee, the Insurance Bureau of Canada’s director of media and digital communications said.

“Media reports have highlighted the gap in some policies.  These were tragic stories and insurers took action to close this gap.”

As Kee alluded to, pressure began mounting when CBC investigations revealed AllState was denying homeowner insurance claims to victims of domestic violence because their husbands’ illegal and intentional acts of burning down the home invalidated the policy.

Whether or not insurance companies will listen to the Insurance Bureau of Canada, however, is still uncertain.

“I think that is question best asked of the individual insurance companies,” Kee said. “If the members agree to align the policies, then it will be across the country regardless of legislation. Currently there is only legislation in British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec - and it has been tabled in Ontario.”

The Insurance Bureau of Canada represents 85% of direct written premiums in Canada according to its CEO, Don Forgeron.

Prior to this announcement, Colin Simpson, CEO of the Insurance Brokers Association of Ontario (IBAO) told Insurance Business there was apprehensiveness in the market surrounding innocent co-insureds because there were a lot of claims insurers haven’t priced for.

Simpson and the IBAO nevertheless support protecting innocent co-insureds whether through legislation or through the insurance industry’s own volition.

The innocent co-insured bill before the Ontario legislature is sponsored by the Liberal government cabinet member, MPP Mike Colle.

Related stories:
IBAO speaks on innocent coinsured law
Ontario judge rules exclusion clauses as unfair