Adverse Cost Insurance in Ontario Personal Injury Cases – Ottawa Accident Lawyer Discusses pros and Cons

In Ontario, and throughout Canada a new type of insurance has become available to injury victims. The insurance is called “adverse cost insurance”. What does it mean to ensure against the cost of legal services or to protect against adverse costs decisions? This relatively new insurance product in Ontario offers some protection to injury victims. The insurance is offered through various brokers. This insurance is a means by which to increase access to justice for injury victims in Ontario.

There are two main disadvantages of obtaining this insurance. One relates to the cost of the insurance – it is an out of pocket expense – although some insurers do not require the premium up front. Of course, insurance companies charge premiums for this insurance. The other relates to conflicts of interest that may potentially arise. I will deal with a couple fo examples. For instance, imagine the opposing side has made an offer to settle the court action and the injury victim does not wish to accept the offer but the insurance company providing cost insurance wants the injury victim to accept the offer. If the injury victim is inclined to reject the offer, the lawyer representing the injury victim would likely have to provide the insurer with the client’s position on settlement and perhaps may be required to provide an opinion regarding the merits of the court action. In some cases, the insurer could insist that the injury victim accept the offer even though the injury victim does not wish to accept the offer. Will the insurer cancel the coverage in the face of such a dispute? In the end, personal injury lawyer takes instructions from the client and not the insurance company. However, in the face of conflicting wishes in relation to the offer to settle, the client and the insurance company are in conflict with their interests.

Some insurance companies will offer insurance to cover legal fees and others offer to cover the costs of an adverse cost consequence of losing the case at trial; some offer both. In essence, the insurance provides coverage to litigants who may face adverse cost consequences by a successful opposing party either at a interim step such as a motion or at trial. In some cases, the insurer may also cover the out-of-pocket expenses of the lawyer handling the file for the injuries (called disbursements).

Can the cost of the insurance be recovered from the opposing party? This issue remains open for the Courts to determine. The cost of insurance may be claimed as the disbursement or a special damage and the Court has discretion to award the amount of insurance.

Insurance companies have a lot of money and can well afford the cost of legal services. The various insurance products now available to injury victims in Ontario assists in leveling the playing field between large insurance companies and individual plaintiffs. In many cases, the risk of losing at trial and having to pay costs party often affects the amount of settlement and injury victim is prepared to accept. In many cases, the amount of settlement may be much less than what the case is worth. With the various insurance products available now to injury victims, the threat of cost are not likely to force injury victims to unreasonably compromise on settlement or abandoned their claim for the risk of losing at trial and having a significant amount of legal costs to the opposing party.

In many cases, the insurance company offering insurance coverage or indemnity coverage to injury victims require some sort of reporting from the lawyer representing the injury victim. As long as the client consents to the release of information, the lawyer can be free to report to the insurer and release information.

One important element to remember is to ensure that whatever insurance product is utilized by an injury victim, the control over decision making in relation to the court action remains with the client at all times.

If you have been injured in an accident and require the assistance of an experienced personal-injury lawyer, contact one of our lawyers will provide consultations free of charge and work on a contingency basis which means that you a no fees until you win.

Call us at 613-315-4878. Marc Quinn, Ottawa Injury Lawyer and Mediator