If an insurer advises an insured that they will defend a claim, the insurer cannot later refuse to defend the claim.
A girl was injured in an ATV accident on an insured property. The insurer advised their insured that they would defend the claim. 5 months later they changed their mind and advised their insureds that they would not defend the claim. Economical Insurance Company brought an application for a declaration that they did not have to defend the action. The application was dismissed.
Here is the case citation: Economical Insurance Group v. Fleming [2008] O.J. No. 20. Ontario Superior Court of Justice. Hoilett J. January 7, 2008.
Here is a link to the decision.
This case was originally summarized by Sarah Swan and edited by David Pilley.
The Insurer brought an application for a declaration that it had no duty to defend or indemnify the Respondents. The Respondents were insured pursuant to a home owner's policy of insurance. That policy excluded claims arising from the ownership, use, or operation of any motorized vehicle. A 12-year old girl, the sibling of the Insureds, was injured while operating an ATV owned by one of the Respondents. The Court found that the Insurer had waived any right to deny a duty to defend and could not now repudiate that position. The waiver occurred in a letter which was sent to the Respondents one month after the Statement of Claim was issued. The letter advised that the Insurer would defend the action. The Court found that a subsequent letter delivered approximately five months later in which the Insurer advised that they would not defend the action did not have the effect of removing the waiver.
