On July 5, 2023, the Saskatchewan Court of Appeal released an interesting ruling wherein an insurer was found not to need to pay out the proceeds of two insurance policies to the Estate of a deceased who had died from a cocaine overdose due to the exclusion clauses related to the commission of criminal acts.

In Jantzen Estate v TD Life Insurance Company, 2023 SKCA 76 (CanLII) the deceased had two insurance policies, one to cover his line of credit (LOC) and one to cover his mortgage, in the event of his death. The mortgage policy was issued in 2011, and the LOC policy was issued in 2015. On the application for the 2015 policy the deceased disclosed that he had been addicted to cocaine for roughly 4 years, and had last used it roughly a half year earlier. His death was found to be an accidental death caused by a combination of cocaine and alcohol. The Estate applied under the insurance policies for the money to pay the LOC and mortgage, and were denied the coverage because of the exclusions related to criminal activity.

The more strictly worded policy exclusion of the two policies used wording that denied payment when death is a result of or while the deceased was committing a criminal offence. The court engaged in a discussion on the subject of the death occurring “while” committing a crime, in this case the crime being possession of cocaine, as well as “as a result” of committing a crime.

The lower court judge found that the deceased had died while committing a criminal offence – possession – which would have triggered the exclusions in both policies, but that the deceased had not died as a result of the possession of the cocaine. The Court of Appeal disagreed and found that the death was also a result of the crime of possession, and engaged in a discussion on the causal connection between the possession of cocaine and the death. The Court found that the lower court judge had adopted a policy interpretation whereby the criminal act needed to be the sole cause of the death for it to trigger the exclusion clause. The Court of Appeal instead found that it is enough that “the actions that constitute a criminal offence be connected in some way with the death of the insured” for the exclusions to apply, rather than be the sole cause. The Court of Appeal further noted that that would be the policy interpretation that the average person applying for insurance would expect. The Court found that “Mr. Jantzen’s possession of the cocaine was a cause of his death in the sense that, but for the fact that he possessed it, he could not have consumed it and, had he not consumed it, he would not have overdosed from it and died.”

Whether the Court’s view that the average person would feel that the criminal act does not need to be the sole cause of death for the exclusion clause to be triggered, is debatable. Similarly, the Court’s analysis does not address the public policy considerations regarding changing perceptions of addiction, with it now being viewed as a disease, which may rankle the general public, and, more specifically, the families of insureds who, like Josh Jantzen in this case, disclose those addictions, continue to pay their premiums, and then whose Estate’s are refused the proceeds of those policies after death.

The public policy aspect of this type of situation was addressed by the Supreme Court of Canada in Oldfield v. Transamerica Life Insurance Co. of Canada, [2002] 1 S.C.R. 742, where Major J. for the majority wrote that “It is consistent with justice that innocent beneficiaries not be disentitled to insurance proceeds merely because an insured accidentally dies while committing a criminal act. To deny recovery would penalize the victim for the insured’s anti‑social behaviour.” In that case the deceased insured had an obligation following a family law settlement to keep his ex-spouse as his life insurance policy beneficiary, and died when a cocaine-filled condom burst in his stomach. When she applied for the proceeds of his life insurance policy, she was denied on the grounds of public policy, since the policy did not include a criminal activity exclusion clause. Major J. went on to say that “I conclude it is not against public policy to permit an innocent beneficiary to obtain the proceeds of a life insurance policy, where the life insured accidentally dies during the course of a criminal act.”

While the two cases may be legally distinguished as there was no criminal activity exclusion clause in Oldfield as there was in Jantzen, the strict interpretation adopted by the Court in Jantzen may not be in line with public expectations. Whether Ontario insurers will decide to deny proceeds in such situations, following Jantzen, is yet to be seen.