Can an insurer later recover defence costs it paid if a claim turns out to be uninsured in Ontario?

It depends heavily on what the insurer actually said, and reserved the right to do, at the time it agreed to defend you. Simply providing a defence under a reservation of rights preserves the insurer's right to later deny that it owes indemnity for the underlying judgment or settlement - but recouping the defence costs it already spent is a separate and more contested question. Some policies and reservation of rights letters explicitly reserve a right to seek reimbursement of defence costs if it's later determined the claim was never covered at all; without that kind of clear, specific reservation, an insurer's ability to claw back money it already spent defending you is much less certain.

Because this turns on the exact wording of both your policy and the reservation of rights letter you received, it's worth reviewing that letter carefully as soon as it's received, rather than after a dispute over recoupment arises. If an insurer is now demanding repayment of defence costs, checking whether it actually reserved that specific right at the outset - clearly and unambiguously - is the central question in assessing whether the demand is enforceable.