How today’s rail blockades could change tomorrow’s policies

A protestor sits on train tracks during a blockade of the rail line at Macmillan Yard in Toronto, Saturday, Feb. 15, 2020. The protest is in solidarity with the Wet’suwet’en hereditary chiefs opposed to the LNG pipeline in northern British Columbia. THE CANADIAN PRESS/Chris Young

Based on Canada’s railway blockades, commercial clients that haven’t considered insurance coverage in the event of unforeseen disruption might be more keen to discuss their options going forward, according to industry experts.

The ongoing railway blockades across the country – most notably in Tyendinaga Mohawk Territory near Belleville, Ont. – have forced a number of interruptions. CN Rail has shut down trains in Eastern Canada, blocking about $350-million worth of freight, while Via Rail has stopped its passenger trains from running between Toronto and Montreal – and claims could follow on the basis of business interruption.

As it stands today, however, clients may be unable to make a claim for financial or product loss because their policies don’t cover incidents like this, said Glenn Jarvie, Brantford, Ont.-based vice president and national practice leader at Crawford Forensic Accounting Services. It’s an issue that could come up the next time brokers meet with commercial clients to discuss policy renewals.

“Situations like this that create financial pain or hardship for businesses are a reminder of the necessity of business owners to regularly consider and discuss their risk with their insurance providers,” he told Canadian Underwriter. “They should take a look annually, sit down with their insurance broker to see whether or not there’s a way to cover the potential for these risks occurring.”

When it comes to business interruption coverage, a claim requires either physical damage to the client’s property or an order by civil authority that prohibits use or access to the property, Jarvie explained. So a client that loses perishable goods might be able to make a claim for the loss of their product. But what about financial loss? If a shipping company is losing money because it can’t get its customers’ products shipped – or they’re stuck in transport – would they be inclined to look at coverage in the future?

“I think this might spark a conversation where the owners and managers of affected businesses speak with their insurance brokers or insurance providers and see if there is coverage available that would help them with this business and financial risk in the future,” he said.

However, an incident that could be classified as civil commotion could be a policy exclusion, noted Brad Cox, Crawford & Company (Canada) national transportation industry leader and branch manager for transportation and marine in Mississauga, Ont. As protests and railway disruptions hit the two-week mark, the end of shelf life for a number of items like produce could be approaching and attempts to make claims could soon follow.

“We need to confirm that they have coverage for this loss,” he added. “This is a somewhat unique situation. Do insurers contemplate these types of events occurring?”