Canadian Underwriter

Court approves insurer’s settlement over COVID flight cancellations

February 23, 2023   by David Gambrill

Woman in an airport checking out flight cancellations on the board

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Ontario’s Superior Court has approved a $4.8-million settlement in a class action lawsuit related to the denial of travel insurance claims by TD Home and Auto Insurance for cancelled flights during the first months of the COVID-19 pandemic.

During that time, airlines were cancelling flights due to public health restrictions to prevent the spread of COVID-19. TD denied travel insurance claims for reimbursement because the airlines at the time were already compensating TD’s policyholders with credits, coupons, or vouchers.

After the class action was launched in September 2020, under a government financing agreement, “the airlines received government assistance if they changed their policies and began offering customers cash refunds instead of credits for travel cancelled due to COVID-19 and pandemic restrictions,” the Ontario Superior Court wrote in a decision released last Thursday. “As a result of this incentive, many, but not all airlines changed their policy and began offering cash refunds.”

This new policy of offering cash refunds “significantly changed the complexion of the litigation,” the court stated.

TD began to mediate the class action with its travel insurance policyholders in June 2022. The two sides set a value to all the travel claims denied by TD, based on a report submitted by NERA Economic Consulting.

Initially, “at the time of the mediation, the NERA Report estimated that the maximum value of all claims was $15.4 million,” the court noted in approving the settlement. “However, $9.2 to $9.4 of that belonged to the portion of the class that received, or that was eligible to receive, cash refunds. According to NERA, the balance of the claims came to a total of between $6.5 and $6.2 million.”

This was further refined to between $7 million and $7.2 million once opt-outs and airline-initiated versus consumer-initiated flight cancellations were considered.

Under the terms of settlement, TD has agreed to pay $4.8 million to the class members. In addition, it will pay $300,000 to pay for legal and administrative fees.

Policyholders who were denied travel insurance coverage but received a cash refund from the airlines will each receive $100, regardless of the size of their claim.

The balance of the settlement will go to policyholders who were denied travel insurance claims, but who received vouchers, coupons or credits from the airlines. This portion will be distributed to the class members “proportionate to the value of each of their claims,” Ontario’s Superior Court wrote in approving the settlement agreement.

Class members will be notified how much they can expect to receive before they receive it.

Overall, the court observed the settlement means each policyholder will receive:

  • $100, if a cash-refunded claim
  • at least 40% of the value of their claim, if not a cash-refunded claim (up to policy limits)
  • the ability to use credits already received from the airlines


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