It’s largely unknown and misunderstood. But it’s also one of the most valuable protections you have under most liability insurance policies.
It is this: your insurer’s obligation and duty to provide and fund legal defence for you the policyholder, when a legal action is commenced against you.
This amounts to a form of legal services insurance. And in claims of dubious merit, it can be the most valuable part of an insurance policy.
Logically, the allegations must be related to the scope of coverage afforded by the policy –where the facts alleged, if proven to be true, would require you or your insurer to indemnify the plaintiff party.
However, what is required is the mere possibility that a claim falls within the scope of coverage for this “duty to defend” provision to be triggered. In this way, the Supreme Court of Canada has found that the insurer’s duty to defend is broader than the duty to indemnify.
This protection exists under your Ontario automobile policy (OAP#1), under the liability provisions of your homeowners’ or tenants’ policy, and under most liability policies used in business (premises, products, operations and professionally liability).
Our clients have frequently used this coverage provision to pay legal costs associated with allegations of wrongdoing – whether or not they are ultimately proven legally liable.
Tags: claims, costs, coverage, defence, defence costs, duty to defend, insurance, legal costs, legal duty, legal expenses, Liability, ontario
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PL
January 24, 2011 at 9:50 am
It is important to an insured to fully understand, that
a auto policy covers more than the vehicle itself, and the
home policy covers more than the building and contents.
KH
January 24, 2011 at 12:15 pm
To have defense provided when there is a good chance there will be no indemnification is very generous ! A gold mine of coverage most don’t realize they have.
jp
January 24, 2011 at 1:17 pm
that is great coverage, and I’m sure most insured’s don’t even know they have it.
HC
January 24, 2011 at 2:46 pm
Very valuable information…. something that should maybe be given more recognition.
gc
January 24, 2011 at 2:58 pm
Most consumers are not aware that this valuable protection is covered under their insurance policies.
LR
January 24, 2011 at 3:01 pm
This is valuable information. I’m sure most insured’s don’t realize they have this.
SD
January 26, 2011 at 9:56 am
I think it is important that insureds know that they have this protection on their home and auto policies.
HG
January 26, 2011 at 10:10 am
As a trusted advisor it is up to us to advise our customers that they have the coverage under their policy in the event an action is brought up against them.