24 May 2018 13:30
An insurer can refuse to compensate the victim of a fire if the latter has not declared that they lived with someone with a criminal history ? Not if the insurer has not asked the question during the underwriting of the risk.
This was recently confirmed by the Quebec superior Court that reviewed the case, Fortier c., SSQ general insurance company inc and has dealt with the question of the impact of the criminal history of a resident on the risk it poses in home insurance.
The facts in the case
This affair took its origin in January 2015. At this time, the residence of Marcelin Fortier takes fire. SSQ general insurance company refuses to compensate her for the losses sustained, on the ground that the numerous case histories of his wife have not been reported to the insurer at the time began their life together in October 2011. At the time of signing the policy in march 2011, the spouse of Mr. Fortier was incarcerated since 2007. For SSQ, it is an aggravation of the risk is of a nature to invalidate the insurance contract.
Mr. Fortin continued his insurer who refuses to pay. He says that he does not think to notify his insurer of his cohabitation with his wife and his past judicial, as he is the only owner of the accommodation. In addition, he reports that at no time SSQ has not asked any questions about the people living under its roof in the questionnaire of the subscription at the beginning of 2011. No question about the criminal record of the other occupants of the residence was not asked.
The judge of the superior Court of Quebec, the honourable Pierre C. Bellavance, gave reason for Mr. Fortier. It considers that the applicant failed to declare to SSQ that his wife came to live with him in the course of the contract. The court has also held that the arrival of a new resident and his criminal history are not likely to influence an insurer in his decision to influence the risk, what has also held the superior Court.
The judge Bellavance added that SSQ could not expect that Mr. Fortier think to disclose the removal of his wife’s in his residence, as no question has been asked with respect to the other residents and their police record. The decision was subsequently referred to the Court of appeal, but SSQ has confirmed to the Newspaper of the assurance that an agreement out of court was reached.
The impact of the decision on insurers
Samuel Gagnon, Ms. Renée-Maude Vachon
Two lawyers from Langlois lawyers have studied and commented on the decision of the court. Me Renée-Maude Vachon and Me Samuel Gagnon have shared their findings with the Journal of insurance. For them, the insurer would have had to acknowledge from the outset its responsibility in the omission of some questions during the underwriting of the insurance policy.
“The judge has upheld that one can expect an insured to notify its insurer if it is to ask a wood-burning stove, for example. However, when we talk about criminal history of a spouse who is not the owner of the home, the insured could not know that he had to notify his insurer. All the more that at the time of purchase, no questions were asked of Mr. Fortier on the other persons living in the accommodation “, says to Me, Vachon.
Ms. Gagnon adds that it is recognized in insurance law that a change to a property must be the subject of a disclosure on the part of the insured to his insurer. “If the insurer has never asked the history of the entourage during the initial subscription, how the insured would have been able to know that it is important ? “
The influence of monetary interest on the premium
The justice Bellavance held that the absence of pecuniary interest of a resident with a criminal record could not have any impact on the home insurance premium. It has been argued that in the case of Mr. Fortier, this cohabitation would not have had influence on the decision of the insurer whether or not to maintain the police.
This interpretation raises, however, questions among lawyers of Langlois. Me Vachon says that such an assertion goes against the case law. She added that a spouse, or a resident may present a moral hazard for an insurer if its antecedents are related to the insurable risk. “Someone could have a grudge against the wife of Mr. Fortier of by his past actions and would have been able to set the house on fire, for example. “
Ms. Gagnon adds that it is essential for insurers to review the questionnaires submitted to the insured during the underwriting of the risk. “If an element is important for an insurer, it is his responsibility to know to the insured. If we had posed questions to the applicant regarding the criminal history of the residents of the dwelling, it would have been his responsibility to disclose to SSQ changes. The case law is clear that it is a continuing obligation to disclose. If a question is not asked by the insurer, it will be difficult to win its case before the courts. “