The general position that bankruptcy can substantially vary the rights of insureds has often been argued and rejected. A recent Ontario Superior Court of Justice decision has confirmed that an insurer's duty of good faith is not extinguished on the bankruptcy of the insured.
The Ontario Court of Appeal recently held that an insurer which had defended its insured for 10 months, without a reservation of rights, could not rely on a policy exclusion to withdraw its defence. In this decision, the court did not find it necessary to distinguish between waiver and estoppel. As such, insurers and insureds alike should ensure that they appreciate the potential consequences applicable to both waiver and estoppel and govern themselves accordingly.
The Ontario Court of Appeal recently reconfirmed that an insured's duty to cooperate with defence council appointed by its insurer is not subject to a standard of perfection. This case serves as a strong reminder that a breach of the duty to cooperate must be substantial. It shows that, in practice, without real consequences arising from an insured's conduct, there can be no substantial breach of the duty to cooperate.
A recent Alberta Court of Queen's Bench decision demonstrates that policyholders must carefully consider the interplay between an insurance policy and its endorsements. One consideration is the distinction between endorsements that provide standalone coverage and those intended only to modify an existing policy's terms. However, most important is the overarching principle that any limitations of coverage should be clearly stated.
The Ontario Superior Court of Justice recently concluded that insurance policies should be interpreted differently when multiple insurers are involved. This decision runs contrary to the basic rules of contractual interpretation and conflicts with well-established precedent. If followed, it could lead to commercially unreasonable results and erode the benefits of coverage available to insured parties.