Limitation Period for Duty to Defend Applications

It is often thought that the limitation period to commence a duty to defend application is two years from an insurer’s refusal to defend.

For example, in Zochowski v. Security National Insurance, 2015 ONSC 7881, Justice Belobaba stated that “[t]he law is clear that a clear and unequivocal denial of coverage triggers the two-year limitation period”.

However, last week, in Reeb v. The Guarantee Company of North America, 2019 ONCA 862, the Court of Appeal stated that the duty to defend is an ongoing obligation to be applied on a “rolling” basis.

Since the applicant sought contribution to defence costs only on a going forward basis, no limitation period attached.