New Brunswick is changing its legislation to prevent insurers from denying payouts to victims of domestic abuse.

The province will be the first in Atlantic Canada to make such changes. Similar changes are being considered in Ontario.

Insurers typically have an exclusion that allows them to deny coverage for damage or loss resulting from a criminal act or an act of vandalism conducted by anyone insured under the policy (such as arson). While it sounds reasonable, this exclusion also affects so-called “innocent co-insureds,” the spouses of the offending insureds, denying them from claiming on damages caused by their partner.

New Brunswick Finance Minister Cathy Rogers said that domestic violence victims are left vulnerable due to the loophole in the current legislation. The province is working to close this loophole and ensure that innocent co-insureds receive their payouts.

"Now with this, that exclusion clause will not be an out for the insurance companies," Rogers told CBC News. Other provinces, such as British Columbia, Alberta, Manitoba and Quebec, already have similar laws in place. "We want to be proactive and join forces with those other provinces," remarked Rogers.

While other Atlantic provinces have yet to establish such rules, Saskatchewan is expecting to have a law of its own in place early next year.

CBC News found that some major insurers have paid innocent claimants regardless of provincial laws. Other insurers have been stubborn about extending coverage to innocent co-insureds.

In April, Intact Insurance told CBC that it paid out claims in these cases only in provinces where it is mandatory. It was only after CBC conducted an investigation on the matter that the insurer amended its policy.


Related stories:
IBC tells members to protect innocent co-insureds
Ontario judge rules exclusion clauses as unfair