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ARTICLE · 07 JUNE 2022

New Québec Regulation Softens Insurers' Duty To Defend

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It is now possible, under certain circumstances set out in the Regulation respecting categories of insurance contracts and classes of insureds that may derogate from the rules of articles...

CanadaInsurance
Karl Boulanger
Karl Boulanger
Julie Himo
Julie Himo
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It is now possible, under certain circumstances set out in the Regulation respecting categories of insurance contracts and classes of insureds that may derogate from the rules of articles 2500 and 2503 of the Civil Code (Regulation), to enter into civil liability insurance contracts that depart from the following public policy principles: 1) insurers must assume an insured's defence; 2) defence costs are in addition to the coverage limits; and 3) insurance proceeds must be applied exclusively to the payment of injured third persons.

The purpose of these amendments is to enable insurers to offer premiums that are lower and similar to the rest of Canada. Rising defence costs had challenged the business model of insurers in Québec, which faced rules not found anywhere else in Canada.

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