Quebec relaxes rules to insurance provisions over the duty to defend

The Quebec government, concerned over the possibility that a growing number of head offices were contemplating leaving the province over rising costs of insurance premiums for big business, is relaxing a legislative provision that compels insurers to assume defence costs of insureds over and above the limits of insurance policies.

The legislative amendment, welcomed by big business, will allow defence costs to be excluded from coverage or included in the limits of insurance only for certain ”categories of insurance contracts” and “classes of insureds.” This change may bring some insurance relief to public companies and large businesses who are struggling with rising premiums to obtain liability insurance, in particular coverage for directors and officers (D&O), in Quebec, according to insurance legal experts.

The provincial government amended article 2503 of the Quebec Civil Code of Quebec on May 27th as part of the adoption of Bill 82, entitled An Act respecting mainly the implementation of certain provisions of the budget speech of 10 March 2020. Regulations that will outline the kinds of insurance contracts and the classes of insureds that will be covered by the changes are in the midst of being drafted, and expected to be issued by fall.

“What this change does is provide more flexibility, more choice for certain classes of insured and for certain insurance policies,” explained Mary Delli Quadri, a commercial, civil and insurance litigator with Gascon & Associates LLP in Montreal. “It’s a welcome change. The people that need to be protected will be protected, and the people who can contract out of it will be able to do so.”

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This story was originally published in The Lawyer’s Daily.

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