Insurance companies with a concurrent duty to defend made to share defence costs

Appeal allowed

Markham (City) v. AIG Insurance Company of Canada, 2020 ONCA 239
Mar. 31, 2020
Thorburn J.A.

Upon being injured at a hockey game, plaintiff sought damages from the City of Markham and Hockey Canada. The city was insured by Lloyd’s Underwriters under a commercial general liability policy and was an additional insured under Hockey Canada’s insurance policy with AIG Insurance Company of Canada.

Case pertained to the duty of AIG and Lloyd’s to defend the claim filed against the city, as well as their rights and responsibilities in accordance with that duty.

AIG did not deny its duty to defend the action but argued that Lloyd’s has a concurrent duty to defend. In this appeal, AIG also questioned the application judge’s decision to make AIG pay the defence costs.

Writing for the court, Justice Julie Thorburn said that, to the extent that the policies of both insurance companies cover the same claims, AIG has the duty to defend up to the limit stated in its policy, but Lloyd’s has a duty to defend against claims outside the scope of AIG’s policy and within the scope of its own.

Given this situation, where there is a concurrent duty to defend, both should pay an equal share of the ongoing costs of defending the claim, subject to a possible re-apportionment after the action is finally resolved.

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