Canadian Underwriter

Calgary Flames sue insurers $125 million for pandemic-related losses

March 23, 2022   by Alyssa DiSabatino

Calgary, Canada - May 23, 2015: Sunset over Calgary's skyline with the Scotiabank Saddledome in the foreground. The dome with its unique saddle shape is home to the Calgary Flames NHL club, and is one of the oldest professional hockey arenas in North America.

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The Calgary Flames have filed a $125-million lawsuit against its insurers to enforce the terms of an all risks insurance policy for “massive losses” due to the COVID-19 pandemic.  

The named defendants in the statement of claim filed in the Calgary Court of Queen’s Bench are Westport Insurance, Royal and Sun Alliance Insurance Company of Canada (RSA-now owned by Intact), Liberty Mutual Insurance, Aviva Insurance Company of Canada, Northbridge General Insurance and Can-Sure Underwriting. 

The claim, which includes allegations not proven in court, states the Flames bought an “all risks” business interruption insurance policy from the defendants that broadly covered “all risks of direct physical loss or damage.” 

The Flames say the COVID-19 virus caused physical loss and damage to their property when the National Hockey League halted the season in March 2020. The Flames played a reduced schedule and fans weren’t permitted to watch in-person because of the loss of use of the Scotiabank Saddledome, says the team. 

But the team said their insurers concluded that “viruses do not cause physical loss or damage.” 

The insurers have not yet filed a statement of defence with the court, Canadian Press reports.

“The all risks policy promised to indemnify Calgary Flames LP against loss of revenue and certain other expenses if it could not use its arenas or other insured properties due to the impact of external physical peril,” the Flames’ claim goes on to state. 

“These covered perils include known and unknown risks, including noxious substances that render arenas unusable. COVID-19 and the COVID-19 virus were precisely among the perils and risks covered. In short, Calgary Flames LP purchased the all risks policy to cover the losses that it could suffer as a worldwide series of physical catastrophes like those brought on by the COVID-19 pandemic.” 

The Flames also state that while its policy did not include any broad exclusions on viruses or pandemics, the insurers “offered coverage with narrower and fundamentally different exclusions,” which shouldn’t prohibit them from covering the team’s losses.  

The claim states the insurers are collectively responsible for 100% of the policy’s coverage limits: Westport (40%), RSA (23.5%), Aviva (12.5%), Liberty (11%), Northbridge (9%) and Can-Sure (4%).  

The team say their insurers “refuse” to honour the terms of their policy. 

This follows the news that the NHL and 20 other clubs including five Canada-based teams filed similar lawsuits in June 2021 in the Superior Court of California in Santa Clara. The NHL alleged their insurers had breached contracts by refusing to reimburse more than $1 billion worth of pandemic losses.  

Toronto Maple Leafs, Ottawa Senators, Winnipeg Jets, Montreal Canadiens, and Vancouver Canucks were among the teams suing in the NHL’s action, which the court rejected in mid-February 2022. The Calgary Flames and Edmonton Oilers were not listed as plaintiffs in the NHL’s action. 

Factory Mutual Insurance Company, The Cincinnati Insurance Company, Starr Surplus Lines Insurance Company, Lexington Insurance Company and Federal Insurance Company were listed as defendants in the NHL’s case, although the Cincinnati Insurance Company says it was removed as a defendant following an amendment. 

A Santa Clara County Superior Courts judge rejected the NHL’s argument to collect more than $1 billion due to pandemic related losses against Factory Mutual, in a preliminary ruling on Feb. 23, 2022.   

Factory Mutual acknowledged the league’s insurance policy covers communicable diseases, but noted it only has a “$1-million annual aggregate limit,” well under the NHL’s $1-billion claim. 

In the NHL case, the Santa Clara judge rejected the league’s claim “that COVID-19 physically changed the air and surfaces at their properties.” But the judge agreed to reconsider the league’s lawsuit if Factory Mutual Insurance Co. fails to honour a communicable disease clause in its policy. 

However, each insurance policy is different. The outcome of the Santa Clara County Superior Courts case does not predict the potential result of the Calgary Court of Queen’s Bench claim.

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