Why a $10-million limit did not apply to mitigation of loss in this professional liability policy

Source: https://www.canadianunderwriter.ca/, February 22, 2021
By: David Gambrill

B.C.’s Court of Appeal recently confirmed that a $10-million coverage limit did not apply to mitigation of loss coverage in a professional liability insurance policy, in part because the policy grouped mitigation of loss coverage together with other types of damage that require a third-party claim to trigger a loss.

Mitigation of loss coverage is more of a “first-party” style of coverage, as the court noted. In this case, the carrier was called upon to pay for costs incurred by the named insured to make necessary repairs before a construction defect in a parkade became the basis for a damage claim later down the road. This is “first-party” coverage in the sense that an insurer makes the funds available to the insured directly, without the requirement of a third-party lawsuit against the insured to trigger the coverage. Read more.

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