Insurer’s duty to defend is broader than duty to indemnify: Ontario court

The Ontario Superior Court has ruled that an insurer has a duty to defend an insured even when the conduct of the claimant — specifically, whether that conduct was illegal — is at the heart of the issue of whether there is policy coverage for the claimant’s liability.
“The duty to defend is broader than the duty to indemnify,” Ontario Superior Court Justice Thea Herman wrote in Coakley v. Allstate Insurance Company of Canada. “While the duty to indemnify may depend on the judgment obtained in the action, the duty to defend arises when the claim is made and depends on the nature of the claim, not on the final outcome.”
Raymond Graham sued the insured claimant, Scott Coakley, for Cdn$2.5 million after an altercation between the two of them resulted in serious injuries for Graham.
As a result of the incident, Coakley was charged with assault resulting in bodily harm.
In his statement of defence, Coakley pleaded that Graham was at fault and that he acted at all times in self-defence. Coakley made a claim against Allstate to indemnify him for any money found to be owing to Graham.
Allstate denied both coverage and a duty to defend. Coakley’s claim was excluded, the insurer argued, because the policy did not cover “bodily injury or property damage caused intentionally by or at your direction or resulting from your criminal acts or omissions.”
Allstate motioned for summary judgment to dismiss the claim, saying there was no genuine issue for trial.
The motions judge ruled otherwise, saying the there was “too much controversy in the evidence as to whether or not Mr. Coakley’s acts were negligent or intentional,” and thus the issues could not be determined in a motion for summary judgment.
The motions judge also found the insurer had a duty to defend Coakley and indemnify him in the event of a loss.
Allstate appealed to the Superior Court, but the Superior Court upheld the decision of the motions judge. The duty to defend, the Superior Court said, “arises from Mr. Graham’s claim, not from the judgment in the case.”