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What is duty to defend?
In title insurance, duty to defend means if anyone challenges or raises an issue that is covered under a title insurance policy, the insurer pays all the legal costs and expenses to defend the insured’s interest in the land. The duty to defend is included in every FCT title insurance policy. It has no dollar limit and when it’s paid, it doesn’t affect your client’s policy amount.
What does duty to defend mean for your clients?
As a legal professional, you offer your clients much more than just advice and expertise. You provide them with care, with service. You advocate for their best interest, and duty to defend ensures the resources to do just that. It means that when an issue is raised against your client, that protection, that service, that care can kick in automatically.
How does duty to defend work?
The most common covered title risk that triggers the duty to defend is when third parties claim an interest in the insured’s land, whether valid or invalid.
Valid third-party claims:
• The Land Registrar may have neglected to bring forward an interest on conversion into the Land Titles system (e.g. an old easement) or an instrument is registered on the wrong parcel.
• The surveyor made an error on the location of the boundaries and it turns out the neighbour actually owns some of the insured’s property.
An invalid third party claim:
• This tends to happen when there is an intentionally difficult or even opportunistic neighbour involved. There is clearly no issue or error at all, but the neighbour believes they have a right to the insured’s land. Often the claim is motivated by another matter altogether and the end goal is to pressure the insured into offering a concession.
The resolution without title insurance
Without title insurance, you would explain the issue and next steps to your client. Then, you would quote the legal costs and expenses required to try and resolve the issue, even if it’s a bogus claim. Upon resolution, not only would your client be out legal expenses, but they could be stuck with a decrease in their property’s value if the resolution is unfavorable.
The resolution with title insurance
With title insurance in place, you can explain the issue to your client and let them know that since the claim relates to a covered title risk, all legal fees and related costs are covered under the policy. At this point, FCT would determine the best way to see to the insured’s interests, sometimes even settling with the insured or retaining a lawyer to defend the insured’s interest in the land. This provides an option for you to continue with the file to ensure your client gets the best possible care, without additional cost.
Not only does title insurance offer your client invaluable protection, it covers their legal costs in the event that protection becomes needed. Sign up to get more protection for your client with duty to defend included.
Insurance by FCT Insurance Company Ltd., with the exception of commercial policies. Subject to certain exceptions, commercial title insurance policies equal or below $10M CAD are provided by FCT Insurance Company Ltd. Commercial title insurance policies above $10M CAD are provided by First American Title Insurance Company. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Some products/services may vary by province. Prices and products/services offered are subject to change without notice.
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