The applicant insurer paid its $200,000 policy limits to the plaintiffs in a motor vehicle accident claim against its insured.
The insurer then brought an application for a declaration that it had no continuing duty to defend the insured.
The court dismissed the application, finding that while the Standard Automobile Policy contains ambiguities regarding defence costs, section 245(b) of the Insurance Act clearly requires the insurer to bear the cost of defending the insured without any limitation tied to the policy limits.
