In McGregor v. Wawanesa, 2025 ABKB 227, the Alberta Court of King’s Bench addressed the question of whether an insurer must provide liability coverage for bodily injury caused by an insured who pled guilty to a criminal offense that caused the injury.
The case arose after the insured, McGregor, caused a fire in his garage while producing cannabis oil using butane. The cannabis oil production was the sole and direct cause of the fire, which then resulted in damage to property and injury to McGregor and his visitors. McGregor was charged with two criminal offences (causing a fire or explosion with bodily harm and possession of an illegal substance) to which he pled guilty.
The Plaintiffs initially sought property and liability coverage but later withdrew their property damage claim. The remaining issue was whether liability coverage under Section II of the policy was available.
The policy provides:
Insured Perils
“You” are insured against all risks of direct physical loss or damage, subject to the exclusions, limitations and conditions of this policy.
Section II
Exclusions
“We” do not insure claims arising from: …
(6) “bodily injury” or “property damage” caused by any intentional or criminal act or failure to act by:
(I) any person insured by this policy;
(II) any other person at the direction of any person insured by this policy;
The insurer denied liability coverage based on exclusion 6 of the policy.
The Plaintiffs argued that for the exclusion to apply, the insured must have committed the criminal act intending to cause harm. In contrast, the Defendant contended that the exclusion applies to all criminal acts, regardless of one’s intent to injure.
To address this issue of whether the Defendant is required to prove intent to cause the loss or damage for the exclusion to apply, the court looked at Section 533(2) of the Insurance Act. The section states:
Unless a contract of insurance provides otherwise, a contravention of a criminal law will not render a claim unenforceable except where the contravention was done by the insured with the intent to bring about the loss or damage.
The Plaintiffs focused on the second part of the section that a contravention of a criminal law will not render a claim unenforceable. The Defendant, on the other hand, emphasized the exception and pointed out that exclusion 6 clearly states that damages caused by criminal acts are not covered.
The court agreed with the Court of Appeal’s ruling in R.E. v Wawanesa Mutual Insurance Company, 2007 ONCA 92, where it concluded that for the exclusion to apply, the criminal act did not have to be intentional.
The court said that Section 533(2) of the Insurance Act “protects an insured’s right to indemnity in cases where a criminal act is committed without the intention to cause the loss or damage. It also permits the Defendant within its contract of insurance to provide otherwise and exclude the claims for indemnity for loss caused by any criminal act whether intentional or not.”
The court noted that this is what the Defendant did under exclusion 6, which expressly excluded from indemnity all claims arising from the insured’s criminal act. It held that the insured’s intention was irrelevant, and that any act by “an insured that causes injury is clearly excluded when it is either an intentional act, or a criminal act.”
Having concluded that intent was immaterial, the next step was for the Defendant to show that the loss was caused by McGregor’s criminal act. As McGregor had previously pleaded guilty to criminal charges wherein he admitted to causing the fire that resulted in the injuries, the court ruled in favour of the Defendant and denied liability coverage under the policy.
This case reminds us that criminal activity can nullify insurance coverage where the policy exclusions are clear and directly triggered by the insured’s conduct, regardless of intent.
Gemma Dee