Coverage litigation can be expensive enough that the cost award becomes a second insurance dispute after the merits are decided. Tragger v Intact Insurance Company, 2026 ABKB 112, addresses that second stage.
The plaintiffs had obtained a liability judgment arising from defective stone siding work. They then pursued Intact and Royal & Sun Alliance under Alberta's Insurance Act, arguing that liability policies issued to the responsible contractors required the insurers to indemnify the judgment.
After succeeding on coverage, the judgment creditors asked the Court for more than $137,000 in solicitor client or enhanced costs. They relied in part on insurance cases where courts had required insurers to bear unusually high costs after failing to honour a duty to defend.
The Court refused to make that comparison automatic. This proceeding concerned the duty to indemnify after liability had been established, not an insurer leaving its insured without a defence in ongoing litigation. The insurers had taken a coverage position that ultimately failed, but their conduct was not found to justify a punitive costs response.
Instead, the Court fixed lump sum all inclusive costs at $38,000.
The distinction is useful because insurance law sometimes speaks broadly about the consequences of an insurer breaching its contractual obligations. Tragger shows that the nature of the breached obligation still matters. A duty to defend problem can expose an insured to immediate litigation pressure and require the insured to fund a defence that should have been provided. A later duty to indemnify dispute is not automatically equivalent.
For insurers, an unsuccessful coverage position does not by itself create full indemnity cost exposure. Conduct still matters. For insureds and judgment creditors, success on the policy does not guarantee recovery of every dollar spent litigating that success.
The case is a costs ruling, not a reconsideration of the earlier coverage result. Its value is in keeping the consequences of a failed indemnity defence tied to the actual conduct and stage of the insurance dispute.