Case Summary: A duty from mere possibilities
The insurer owed a duty to defend because there was a mere possibility of damages beyond the deductible amount.
Insurance law – Liability insurance – Strata corporations – Wrap up policies – Property damage – Exclusions – Deductible – Additional named insured – Duty to defend – Practice – Appeals
GFL Infrastructure Group Inc. v. Temple Insurance Company,  O.J. No. 2312, 2022 ONCA 390, Ontario Court of Appeal, May 16, 2022, J.C. MacPherson, D. Paciocco and J.C. George JJ.A.
A developer was sued by a condominium corporation for alleged defects in the construction of the building. The developer commenced an action claiming contribution and indemnity from 38 of its contractors. Three of the contractors and the developer sought a defence from the developer’s insurers under the developer’s Specific Project Wrap-Up Liability Policy, which named these three contractors as additional insureds. The insurers denied the claim for a defence. The Court of Appeal affirmed the lower court’s decision that the insurer owed a duty to defend to the developer and three contractors, rejecting the insurers’ argument that it had no duty to defend because the claim fell within the policy’s deductible. The court should not prematurely assess evidence and make factual findings on matters at issue in the underlying litigation. All that is required is the mere possibility that the claims fell within liability coverage. The mere possibility test also accounts for the potential application of exclusions withdrawing coverage. There was a possibility of the damages claim exceeding the $10,000 deductible.
This case was digested by Dionne H. Liu, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Dionne H. Liu at firstname.lastname@example.org.