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Please Pay My Lawyer’s Bill > Appeal Court Upholds Ruling Against Insurance Company

Case Comment – Economical Insurance Group v. Fleming (2009 Ontario Court of Appeal)



The 12 year old friend of your child is seriously hurt while visiting your cottage.  You tell your insurance company.  A lawsuit is started and your insurance company agrees to respond to the claim.  Then your insurer refuses to defend you.  Now what?


In Economical Insurance Group v. Fleming (2008 Ontario Superior Court of Justice), the owners of the cottage brought a court motion against their insurance company, seeking protection of their insurance policy.  Mr. Justice Hoilett, of the Ontario Superior Court of Justice, agreed with the cottage owners by finding that the insurance company was required to provide coverage and a defence to them.  The Ontario Court of Appeal has just upheld the decision of the motions Judge


The facts:


  • July, 2005 – the defendants have friends over to their cottage, allow the friend’s 12 year old daughter to drive an ATV left at the cottage, resulting in severe injuries;
  • Economical insures the cottage.  The defendants have car insurance with another insurer (who did not participate in this motion);
  • defendants reported the accident to Economical, who sent a letter to their insured in Sept/2005 listing the ‘respective rights of the insurer and insured’ (standard form letter); this isn’t a reservation of rights letter;
  • Statement of Claim issued July/2006 claiming $5.5M, Economical is properly given a copy;
  • Economical sends letter to it’s insured in Aug/2006 stating it will defend and that policy is in effect to the $1M limit and excess requires defendants to respond personally;
  • Jan/2007 – Economical sends another letter now stating that there is NO coverage or duty to defend, because the ATV is an excluded motorized vehicle that their policy does not respond to; and
  • Jan/2008 – this motion heard


Gregory Chang

Toronto Insurance Litigation Lawyer