Ontario court certifies class-action against insurers related to COVID-19

TORONTO – Ontario’s Superior Court of Justice has certified a class-action lawsuit against fourteen insurance companies that denied business interruption claims related to COVID-19.

The class action, launched by several small businesses including a suit store, a smoothie shop and a dance studio, claims businesses across Canada suffered billions of dollars in losses after they were forced to close because of the pandemic.

“The certification of this important claim will allow business owners, large and small, to recover the losses they suffered due to the pandemic,” said Kirk Baert, a partner at Koskie Minsky LLP in an email.

Koskie Minsky brought the class action forward along with Merchant Law Group LLP.

To be part of the class action, a business has to have filed a business interruption claim with one of the defendants by Aug. 31 for business losses related to the virus specifically affecting their premises, or from the order of a civil authority, said Baert.

According to court filings, insurance companies including the Co-operators General Insurance Company and Intact Financial Corp. have denied business interruption claims in part because the coverage requires physical loss or damage to the property, which they argue the presence of a virus on the property and government orders restricting operations don’t count towards.

The class action certified on Aug. 20 by Justice Edward Belobaba against the group of insurers is separate from other class action lawsuits certified last month against the Canadian subsidiary of UK-based Aviva plc.

Aviva, which faces class action lawsuits led by a windows company, a branch of the Royal Canadian Legion and a denturist, has been singled out because it offers more coverage related to situations like the pandemic than the other 14 insurers being sued.

According to court filings, unlike the others, it specifically offers coverage for business income loss caused by restricted access to the property because of government orders related to an outbreak of a contagious or infectious disease, as well as coverage for negative publicity.

In an affidavit, Aviva’s chief technical underwriter said the restricted access policy isn’t covered by provincewide shutdown orders, and the negative publicity clause doesn’t cover losses arising from global pandemics.

Aviva Canada said in a statement that it is sympathetic to the difficulties caused by COVID-19, and has supported commercial customers with a variety of short-to-medium term relief measures, but that its coverage doesn’t extend to the current pandemic.

“As is the case with all major insurers, we have always maintained that there is no coverage for business interruption losses caused by the Covid-19 pandemic under our standard policies.”

Intact Financial Corp. said it wouldn’t comment because the case is before the court, while Co-operators did not respond to a request for comment.

 

Feature image by iStock.com/Kanawa_Studio