In a recent Court of Appeal Decision of Carneiro v. Regional
Municipality of Durham et al v. Zurich Insurance Company Ltd.
2015 ON CA 909, the Court of Appeal appears to have laid
to rest any doubt in terms of an insurer's obligation to
provide a defence to a Municipality, when the Municipality is named
as an additional insured under a snow removal contractor's
In this case, involving a fatality claim flowing from a motor
vehicle accident on an icy roadway, Miller Maintenance had the
snowplowing contract with Durham. The Municipality was named
as an additional insured under Miller's liability policy with
Zurich. There were allegations against Durham contained in
the Statement of Claim which could be covered under Miller's
policy and other which would not.
The Court of Appeal appears to be unequivocal in indicating
that, in these circumstances involving an unqualified duty to
defend obligation, the insurer is required to pay all reasonable
defence costs for the additional insured, including defending
claims which are not covered and to provide independent counsel, at
the insurer's expense, to defend the action. At the end
of the proceedings, the parties or the Court will sort out by way
of apportionment, which defence costs deal solely with uncovered
claims or exceed reasonable costs associated with the defence of
With respect to the insurer's assertion that the additional
insured could simply recover costs at the end of the litigation if
not found liable, the Court of Appeal indicated that "[T]he
duty would be a hollow one if the insurer's only obligation
were to indemnify its insured at the end of the day".
This case has implications and potential applicability in slip
and fall claims where such entities as municipalities, commercial
property owners, school boards and so forth have been named as
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