Fortuity Clauses in Liability Insurance: Solving Coverage Dilemmas for Intentional and Criminal Conduct

44 Pages Posted: 1 Sep 2011 Last revised: 4 Jun 2012

See all articles by Erik S. Knutsen

Erik S. Knutsen

Queen's University Faculty of Law

Date Written: June 4, 2012

Abstract

Should losses resulting from criminal or intentional conduct be insurable through liability insurance? Insurers have crafted fortuity clauses in liability policies in order to ensure that coverage is available only for fortuitous losses, not certainties. Two common fortuity clauses oust coverage for losses arising from “intentional” or “criminal” acts. Yet what is “intentional” conduct? And what is “criminal” conduct?

These interpretive problems which have vexed Canadian courts for decades have produced jumbled insurance jurisprudence which has spawned multiple, distinct ways of answering what appear to be simple insurance coverage questions. The reason courts have had such difficulty with interpreting these particular fortuity clauses is because courts and litigants are often distractingly entranced by the normative pull of morality embedded in the act of excluding liability insurance indemnity coverage for criminal and intentional conduct. The implicit (and sometimes explicit) narrative of fortuity driving these insurance cases inappropriately shifts to a narrative about punishment, deterrence, and morality. This article explores that shift and provides a new interpretive framework which restores a principled approach to interpreting these fortuity clauses. It does so by grounding courts’ and litigants’ thinking in the notion that these clauses are there to respond to moral hazard fortuity concerns within the context of a publicly regulated accident compensation system of which insurance is a fundamental part.

Keywords: insurance, fortuity, risk

Suggested Citation

Knutsen, Erik S., Fortuity Clauses in Liability Insurance: Solving Coverage Dilemmas for Intentional and Criminal Conduct (June 4, 2012). Queen's Law Journal, Vol. 37, 2011, Available at SSRN: https://ssrn.com/abstract=1920320

Erik S. Knutsen (Contact Author)

Queen's University Faculty of Law ( email )

Macdonald Hall
128 Union Street
Kingston, Ontario K7L 3N6
Canada
613-533-6000 ext. 78360 (Phone)
613-533-6509 (Fax)

HOME PAGE: http://law.queensu.ca/facultyAndStaff/facultyProfiles/knutsen.html

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