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.

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Insurers risk hefty bill if they (erroneously) conclude they have no duty to defend

Insurance companies who conclude that they have no duty to defend an insurer facing an action, and by extension no obligation to indemnify, risk being surprised with a hefty bill, following a ruling by the Quebec Court of Appeal.

In a ruling that repeatedly hammers the distinction between a liability insurer’s duty to defend with its obligation to indemnify, the appeal court warns insurance companies that it cannot come to the hasty conclusion that it has no duty to indemnify simply because it has no duty to defend.

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