Across Ontario, Insurance and Indemnity companies are approaching lawyers for business. These products have some basic similarities. This has bred a lot of confusion about these products – lawyers (and even judges) have mistakenly used the term “insurance” to describe an indemnity product.
THE BOTTOM LINE: Insurance policies have distinct advantages over Indemnity contracts. Insurance companies are licensed and regulated, their capital is protected, and they have decades of global experience. The Insurance product gives you Delegated Authority. And courts in Ontario are finding After-The-Event (“ATE”) insurance is a strong weapon against Security for Costs.
We have researched the two leading companies offering these products in Ontario, their features and benefits, and recent Ontario cases. (Terms and figures in this article based on information available as of August 2015.)
Two recent Ontario cases show the additional security arising from ATE Insurance:
- In the case of Brent Grotz v. 1392275 Ontario Inc. o/a Hilton Garden Inn Toronto/Markham et al the plaintiff’s lawyer was able to use ATE Insurance to defeat a Security for Costs motion.
- In the case of Alary v. Brown, 2015 ONSC 3021, the Ontario court found the Indemnity product to be weaker than Insurance and thus not able to defeat a Security for Costs order.
Globally, ATE insurance is a mature mainstream product, developed primarily in the United Kingdom where it is now mandatory. Recovery of ATE insurance premiums as disbursement was proven in Callery v Gray