An Ontario Court recently released the Hoang v Personal Insurance Co. decision on legal costs against insurance companies that have wrongfully denied a claim. The Court noted that it is typical for courts to award legal costs to the successful party on a partial indemnity basis- that is in the range of 40-60% of one’s legal fees. But the Court here determined that the unique nature of an insurance policy suggests that successful plaintiff’s should be better compensated when fighting the wrongful denial of their insurance benefits:
One purchases an insurance policy for coverage in the event of liability, and it is the premium payable under the policy that is the cost of that coverage. Insurance companies are by their nature constantly involved in litigation, and it would be unfair and burdensome to make their customers pay a premium plus legal fees in order to obtain the coverage they bought. The premium is presumed to reflect the insurance company’s risk. If it chooses to attempt to reduce that risk by engaging in litigation over its obligation to provide coverage it should be made to fully compensate the successful party if it loses.
The Court thereby awarded the plaintiff full indemnity of their legal costs. As an office that assists many people through their struggle to access their insurance benefits, we certainly support the Court’s reasoning.