Because of a recent B.C. Supreme Court decision, insurers should reconsider the wording of Family Exclusions in their homeowner policies. In Gill v. Ivanhoe Cambridge 2016 BCSC 252 a two year old child who was with his father, was seriously injured when he fell through an opening in a glass partition in a shopping mall to the ground below. The child sued several defendants and some of those defendants filed third party claims against the father, alleging that the accident was caused or contributed to by the father’s failure to supervise. The father filed a Third Party Notice, seeking coverage under his homeowner policy but the insurer denied coverage, relying on the Family Exclusion which said:
There is no coverage...for claims arising from...Bodily injury to the Insured or to any person residing in the Insured’s household...
The judge concluded that the Family Exclusion did not apply to third party claims made by strangers for two reasons.
First, the judge considered the object of Family Exclusions and noted that their purpose is to eliminate coverage for claims by people residing in the same household against each other because of the potential for collusion.
Second, the judge noted more comprehensive wording that the insurer had used in other exclusions in the policy such as the drug activity exclusion, the terrorism exclusion and the mold exclusion and the judge indicated that if insurers want to exclude claims by strangers arising from injuries to household members, insurers can beef up Family Exclusions by adding the italicized words set out below:
There is no coverage...for claims arising from...Bodily Injury to the Insured or any person residing in the Insured’s household, whether such claims are brought by the Insured, a person residing in the same household, or any other person.
Insurers that want to include robust and effective Family Exclusions in their homeowner policies should consider adopting the wording suggested by the judge in this case.