Is the insurance company always obliged to pay the “legal defence costs” in favour of the insured?

In ruling no. 4275 of 16 February 2024, the Italian Court of Cassation, addressed once again the subject of ” legal defence costs ” in  liability proceedings, confirming its previous rulings (precisely: ruling no. 26683 of 15 September 2023 and ruling no. 21290 of 5 July 2022).

In the proceeding brought against a decision of the Court of Appeal of L’Aquila, the Court of Cassation clarified that the request of the insured to be – in general – indemnified by the insurer “against any judgement and any condemnation” does not  automatically include the legal defence costs pursuant to article 1917, paragraph 3, of the Italian Civil Code, since: “the insurer’s obligation to reimburse the aforesaid expenses is independent of a ruling in which the   the insured succumbs against the third party and arises from the contract”.

In fact, the insured party who wishes to obtain the reimbursement of the legal expenses from the insurer is held to formulate a specific request to this effect in the relative proceeding, since, according to the Court of Cassation, the request for reimbursement of the costs and fees contained in the insured’s brief  referred exclusively to the costs in case of  succumbence, and not to the legal defence costs.

With regard to the latter aspect, the Supreme Court has also ruled that the legal defence costs can only be claimed if the insured can prove that they have actually been paid.

For the sake of clarity, it should be recalled that, the ” costs in case of succumbence” in the context of a dispute concerning the validity of the insurance coverage invoked in the proceedings, should be understood as the costs that the insurer should be ordered to pay in the event of the insured’s victory. The term ” legal defence costs”, on the other hand, refers to the costs incurred by the insured in order to contest the claims brought by an allegedly injured party in an action for compensation.

On the basis of the above principles, the Court of Cassation rejected the appeal and confirmed the decision of the Court of Appeal of L’Aquila, which had rejected the insured’s claim.