February 23, 2021 by Greg Meckbach
Aviva Canada is facing two proposed class-action lawsuits in Ontario from clients whose business interruption claims were denied during the ongoing pandemic.
Allegations that Aviva has breached insurance contracts by denying BI claims have not been proven in court.
Nordik Windows is the proposed representative plaintiff in one of Ontario lawsuits, Stephen Birman, a partner with law firm Thomson Rogers, said in an interview Monday.
Thomson Rogers is forming a consortium with two other law firms – Lax O’Sullivan Lisus Gottlieb, and Miller Thomson – to represent Canadian clients (including Nordik Windows) who had BI coverage written by Aviva Canada.
A court date is scheduled Apr. 26, said Birman. That is when the law firms are hoping to have the Nordik lawsuit certified as an Ontario class action.
“There are tens of thousands of [other Aviva clients] who have the same coverages that are at issue that would be part of the class action,” said Birman.
“As this issue relating to business interruption coverage is subject to litigation, it wouldn’t be appropriate for us to comment further,” an Aviva spokesperson told Canadian Underwriter Tuesday.
In a second proposed class action in Ontario against Aviva, law firm Lerners LLP is representing some denturists, as well as some branches of the Royal Canadian Legion whose BI claims arising from the COVID-19 pandemic were allegedly denied.
Originally, Aviva was one of 16 insurers named in a third proposed class action, filed in Ontario this past July, by law firms Koskie Minsky and Merchant Law Group. That came four months after the World Health Organization declared COVID-19 a pandemic. Ontario has since enacted severe restrictions on businesses in an effort to reduce people’s contacts outside their own homes.
At one point, five class actions had been filed in Ontario against insurers, Justice Edward Belobaba wrote in Workman Optometry et al v. Aviva Insurance et al., released Jan. 26, 2021 by the Ontario Superior Court of Justice.
In a situation such as this, when multiple lawsuits are started in the same jurisdiction, a judge must decide which law firms will represent plaintiffs in which proposed class actions. There cannot be two or more certified class actions in the same jurisdiction representing the same class in relation to the same claim, noted Justice Belobaba.
As a result of Justice Belobaba’s Jan. 26 ruling in Workman, Aviva is removed as a defendant in the Workman class action against the 16 insurers filed this past July by Koskie Minsky and Merchant Law Group.
So, instead of Aviva being one defendant in the Workman lawsuit, two separate class actions are now “carved off” from the Workman lawsuit, Justice Belaboba ruled. This is because Aviva is providing significantly different policy wording from the remaining insurers in Workman.
Specifically, Aviva is the only insurer out of the original 16 named in the Workman lawsuit that provides coverage for loss of income “caused by the interruption of the business when ingress or egress from the premises is restricted in whole or in part by order of a civil authority resulting from an outbreak of a contagious or infectious disease that is required by law to be reported to government authorities.” Moreover, Aviva is only one of three (along with Gore Mutual and Wynward) providing coverage for BI from “outbreak of an infectious disease” within a certain distance of the premises and required to be reported to government authorities, wrote Justice Belobaba.
Having class actions against Aviva only, with respect to its specific policy wording, makes it easier to discern common issues and easier for cases to be decided, Justice Belobaba suggested.
“Effectively [Aviva’s] argument is the wording does not cover global pandemics,” Birman told Canadian Underwriter Monday.
In his Jan. 26 carriage motion ruling, Justice Belobaba quoted from an affidavit from Nordik Windows CEO Philippe Bechard.
“I had no interest in being part of that class action when I realized that not every insurance company provided the same coverage as the Aviva policy,” Bechard said in his affidavit, as cited in Belobaba’s ruling. “The policy Nordik purchased provided specific coverage for business interruption resulting from an infectious or contagious disease. I did not believe it made sense for Nordik’s claims to be grouped with other companies who did not purchase Aviva policies with the same coverage. I wanted to proceed with the claim as quickly and efficiently as possible.”
The law firms who originally filed in July 2020 against the 16 insurers in the Workman action argued that they should continue to represent claimants suing Aviva (and keep Aviva as a defendant) because all of those insurers had “identical or strikingly similar policy wordings.”
Justice Belobaba disagreed, which is why he gave the green light for Lerners to proceed with its own lawsuit (representing denturists and legion branches), and for the group comprised of Thomson Rogers, Lax O’Sullivan Lisus Gottlieb, and Miller Thomson to represent Nordik and other claimants wanting to sue Aviva over denial of BI coverage.
Remaining defendants in the Workman action include The Co-Operators General Insurance Company, Continental Casualty Company, Desjardins General Insurance Services Inc., Economical Mutual Insurance Company, Federated Insurance Company Of Canada, Gore Mutual Insurance Company, Intact Insurance Company, Lloyd’s Underwriters, Northbridge General Insurance Corporation, Novex Insurance Company, Royal & Sun Alliance Insurance Company Of Canada, SGI Canada Insurance Services Ltd., Travelers Insurance Company Of Canada, The Wawanesa Mutual Insurance Company and Wynward Insurance Group.
One of proposed representative plaintiffs in the separate Nordik lawsuit against Aviva is Bingemans, the largest hospitality company in Waterloo Region.
The Aviva wordings at issue in the Nordik lawsuit are “very similar” to wordings at issue in a test case launched in 2020 by the British Financial Conduct Authority, said Birman.
In the British test case, the FCA took eight insurers (Aviva was not one of them) to court to get an interpretation of more than 21 different policy wordings. The U.K. Supreme Court ruling, which is binding only in Britain, was released Jan. 15 and was largely against the insurers in the case. One category of wordings in the British FCA test case cover BI if people are prevented from accessing a business location as a result of actions or advice of a government authority. Another category covered BI from outbreak of a disease within a certain distance (one mile or 25 miles depending on the exact policy wording) from the premises.
Aviva the worst insurance company I’ve dealt with, I’ll never go with aviva for the rest of my life. They just refuse to pay out, what use is insurance if they don’t payout.
Bottom line, if there is no physical or direct damage, there is no cover. Having said this, companies such as Gore, AVIVA and possibly Zurich, do have Extensions of their policies that cover infection/contagious diseases, but with very low limits of coverage and possibly higher limits, but not the same Limit as an Insured may have under a true Biz Interruption Claim.
98% if not more of the companies are very clear on infectious diseases and if there is no physical/direct loss there is no coverage. Insurance Policies are not meant to cover these types of losses, just like war, wear and tear, inherent vice, and so on
I am not sure why the general public thinks every time there is a disaster, that Insurance Companies MUST pay for them. If they did no one would have insurance.
Let’s go back to the basics. When Insurance was introduced, it was for Fire, thereafter if was Fire, Lightening and Limited Explosion of Coal, Natural and Manufactured Gas. Now everyone wants their Insurance Policy to actually be a maintenance contract where no one has to be responsible for anything.
There is a reason why governments are stepping in to help, and that is because they are aware these are not covered losses. To me, business in these lawsuits are double dipping, and although I feel for all businesses and I support businesses by purchasing by telephone and they drop off to my door. HOWEVER, if you don’t have any emergency plan in place when you go into business and have at least 6months to 1 years in funds to support your business during hard times, perhaps you shouldn’t be in business.
I recall most businesses interviewed didn’t even have the next month rent the month the pandemic started. That is just crazy.
Only any opinion, but factual
just to clarify my comment about Gore, AVIVA and possibly Zurich, do have Extensions of their policies that cover infection/contagious diseases, but with very low limits of coverage and possibly higher limits, but not the same Limit as an Insured may have under a true Biz Interruption Claim.
There still has to be an outbreak with in the business itself, and sometimes, the extension will cover if it is shut down due to civil authority, etc
The government has not stepped in and actually helped most business that had this. Especially tourism-based businesses that have lost hundreds of thousands and even millions of dollars over the past 14 months. We were assured that if we were not allowed to operate for any reason… Business interruption insurance would cover those losses.
Well written and very fair in your judgment and presentation.
Insurance is a product requiring understanding and communication on both parties. Trouble is all too often there is less attention paid to details in an insurance policy than there is when ordering a double latee, whole milk, super sweet light whipped topping….except of course “How much is it?” That never enters the double latee conversation.