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Heart Zap v. Lloyd’s, (June 2019): Unpaid Merchandise Lost in Mail Scam Covered by All Risks Policy

Written by Aaron Peterkin

Note: This Article originally appeared on

Underwriters of “all risks” property policies take notice. Last month, Ontario’s Superior Court of Justice decided in favour of coverage where the insured was defrauded of $37,000 of defibrillators devices, having mailed the merchandise, before receiving payment, to a “fake” purchaser (i.e. someone who never intended to pay). Respectfully, the decision is problematic.

The insuring intent of all risks policies is to indemnify against fortuitous property losses. In Heart Zap v. Lloyd’s Underwriters, 2019 ONSC 3667, the loss in question arose by virtue of series of unquestionably intentional and non-negligent acts (i.e. the insured’s unwitting but otherwise voluntary involvement in the fraudulent scam). Flynn J.’s reasoning expresses that an insured’s lack of awareness or understanding of another’s nefarious motives can provide the requisite element fortuity. Is gullibility in the course of a commercial transaction fortuitous? 

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insurance, superior court of justice, aaron peterkin, brownlee llp, all risks policy, scam