Life Insurance Denied For Criminal Activity

Life Insurance Denied For Criminal Activity

Velentyne Estate v The Canada Life  2017 BCSC 1444 upheld the insurer’s exclusion clause that mortgage insurance would not be payable upon a death if the death resulted as a result of criminal activity. The Court found that the deceased was a drug dealer who likely died as a result of his criminal activity, despite his body never having been found.

The Court was satisfied based on the wording of the clause that I do not have to find that Mr. Valentyne was actually selling drugs at the time of his death; I need only be satisfied on a balance of probabilities that his death was a result of his involvement in criminal activity.

[14] The distinction between the two types of triggering events has been described as follows in David Norwood and John P. Weir, Norwood on Life Insurance Law in Canada, 3d ed. (Toronto: Carswell, 2002) at page 462:

Causal connection would not seem to be required where the provision excludes death while committing or attempting to commit a criminal offence, but it would appear to be necessary where the exclusion is for death resulting from committing or attempting to commit such an offence. If a bank robber rushes onto a roadway in the course of making a get-away and is knocked down by a car, the causal connection would be established, but if he is casually strolling on the sidewalk away from the scene of the crime, and a brick falls on the robber’s head, it would seem clear that the claims for the accidental death insurance benefit may still be made.

[15] The phrase “a result of” therefore imports some type of causal connection although the phrase is broader than a clause requiring that death be “caused by” a stated activity: Raywalt Construction Co. Ltd. v. Allstate Insurance Company of Canada, 2010 ABCA 320 at paras. 11 and 14.