To Defend, or Not to Defend, That is the Question ….

February 4, 2013 | Teneil MacNeil

Vishal Malaviya (“VN”) was covered under Ontario’s Statutory AutomobilePolicy (the “SAP”) for motor vehicle insurance through Jevco Insurance Company (“Jevco”), having opted for the minimum liability limit of $200,000, and having been sued for an amount in excess of same as a result of a motor vehicle accident that occurred on October 14, 2005 (the “action”). Jevco, in response, paid $200,000 to the plaintiffs in the action and brought an application before the Court seeking a declaration that it had no continuing obligation to defend VN as his liability limit was exhausted.

The application was dismissed on the basis that the Insurance Act (the “Act”) does not say, or even suggest, that an insurer must bear the cost of defending an insured only up to the liability limit. “[Q]uite the contrary, it provides that the defence costs of a claim are to be borne by the insurer. There is no limiting language in section 245”. Second, while the advisory in section 3.3.1 of the SAP informs insureds that they may retain their own counsel when facing a claim in excess of the liability limit; still, according to Justice Morgan of the Ontario Superior Court of Justice, this should be read as supportive of “the overall policy thrust of the Act – that is, as keeping the insurer and its chosen counsel on track in their defence of the insured, not as relieving them of their duty”.

See Jevco Insurance Co. v. Malaviya, 2013 ONSC 675.


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