An insurer may have to both defend and prosecute a claim against their insured
The plaintiff property owners were successful in their action involving an insurer's duty to defend. The property owners were involved in two underlying actions involving slip and falls in parking lots where they had contracts with a winter snow removal contractor to clear the lots. The property owners third partied the contractors in the underlying actions.
RioCan Real Estate Investment Trust v. Lombard General Insurance Co. April 16, 2008. Ontario Superior Court of Justice. Hennessy J.
The plaintiff property owners hired a contractor to remove snow and ice from parking lots. A term of the contract required that an insurance policy be in place naming the property owners as additional insureds. The property owners third partied the contractor in the underlying slip and fall actions, and attempted to have the insurance company defend them. The insurance company refused submitting it would be placed in an impossible position if it were obliged to defend the actions due to the wording in the pleadings.
The underlying action alleged negligence against the owners for failing to maintain the parking lot free of ice and snow, as well as claims asserting breaches of their statutory obligations as an occupier. While the failure to properly maintain the parking lot would fall under the insurer's duty to defend, the alleged breaches of the Occupier's Liability Act would not.
The insurer's submitted that it would not be able to properly defend the negligence claim against the snow removal contractor as it may need to argue the property owners were negligent or in breach of their statutory obligations under the Occupier's Liability Act. It would be in the interest of the insurer to find that the negligence fell outside the policy.
The court held that the duty to defend was triggered by the pleadings, and the insured need to demonstrate only a mere possibility that the claim would fall within the policy in order to trigger the duty to defend. This duty could be negated by the insurer if it could demonstrate that the claim fell outside the coverage due to a specific exclusion within the policy. There was no exclusion found within this policy. The fact that a plaintiff pleads multiple and potentially conflicting claims does not automatically negate the insurer's duty to defend. The widest latitude should be given to the allegations in the pleadings and where one claim embodies the true nature of the claim itself, a duty to defend the entire claim then arises.