Duty to Defend the “Additional Insured”

January 14, 2016 | Randall Carter

In a recent Court of Appeal Decision of Carneiro v. Regional Municipality of Durham et al v. Zurich Insurance Company Ltd. 2015 ON CA 909, the Court of Appeal appears to have laid to rest any doubt in terms of an insurer’s obligation to provide a defence to a Municipality, when the Municipality is named as an additional insured under a snow removal contractor’s insurance policy.

In this case, involving a fatality claim flowing from a motor vehicle accident on an icy roadway, Miller Maintenance had the snowplowing contract with Durham.  The Municipality was named as an additional insured under Miller’s liability policy with Zurich.  There were allegations against Durham contained in the Statement of Claim which could be covered under Miller’s policy and other which would not.

The Court of Appeal appears to be unequivocal in indicating that, in these circumstances involving an unqualified duty to defend obligation, the insurer is required to pay all reasonable defence costs for the additional insured, including defending claims which are not covered and to provide independent counsel, at the insurer’s expense, to defend the action.  At the end of the proceedings, the parties or the Court will sort out by way of apportionment, which defence costs deal solely with uncovered claims or exceed reasonable costs associated with the defence of covered claims.

With respect to the insurer’s assertion that the additional insured could simply recover costs at the end of the litigation if not found liable, the Court of Appeal indicated that “[T]he duty would be a hollow one if the insurer’s only obligation were to indemnify its insured at the end of the day”.

This case has implications and potential applicability in slip and fall claims where such entities as municipalities, commercial property owners, school boards and so forth have been named as additional insureds.


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