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INSURERS - Duties - Duty to defend

Wednesday, October 06, 2021 @ 5:46 AM  

Lexis Advance® Quicklaw®
Appeal by the insurer from a motions judge’s decision that found it had a duty to defend and indemnify the respondent insured. All of the insured’s vehicles were insured by the insurer under a commercial fleet insurance policy. The insured had a van it used to transport employees and tools to job sites, for meetings and as a lunch location. In 2016, the insured purchased a modified school bus, intending to use it in a similar fashion to its van. The day after its purchase, the bus was involved in a single-vehicle accident while being driven by one of the insured’s employees who was named as an insured driver. The insurer refused to defend or indemnify the subsequent personal injury claims advanced by three passengers.

HELD: Appeal dismissed. There was no ambiguity in the insurance policy, which provided for 14-day automatic coverage for a newly acquired automobile. The bus was an automobile as defined in the Insurance Act and a newly acquired automobile within the meaning of the policy. There was no need to refer to the reasonable expectations of the parties as done by the motions judge. If anything, the test developed by the motions judge was too beneficial to the insurer, but the resulting order was correct. The insurer was required to defend and indemnify against the third-party claims.

Aviva Insurance v. PK Construction Ltd., [2021] N.S.J. No. 362, Nova Scotia Court of Appeal, D.R. Beveridge, J.E. Fichaud and E. Van den Eynden JJ.A., September 9, 2021. Digest No. TLD-October42021006