Class actions asserting pandemic BI insurance coverage are starting to mount in the ‘In’ baskets of Canada’s insurance defence bar.
Most recently, Koskie Minsky announced July 6 that it will be one of two firms (the other being Merchant Law) filing a class action lawsuit against insurers. “Business interruption insurance is designed for circumstances such as the current pandemic,” Kirk Baert, a partner with Koskie Minsky, says in the release announcing the action.
The same release does not cite any particular policy language.
Generally, commercial property and casualty insurers say business interruption coverage is triggered by a named insured peril [such as water damage or a fire] on a property policy. So if a client had to shut down its business, but not because of an insured property peril, many insurers argue this does not necessarily trigger BI coverage.
But ultimately, if a court is looking at a coverage dispute, the actual policy wording would be a key consideration, Hollis Bromley, member at large of ARC Group Canada and partner at Alexander Holburn Beaudin + Lang LLP, told Canadian Underwriter earlier. Bromley was interviewed earlier this year and not in the context of Koskie Minsky’s July 6 announcement.
Canadian Underwriter asked a Koskie Minsky spokesperson Tuesday for a copy of the statement of claim but did not immediately hear back. [Editor’s Note: We will update as information becomes available.]
For its part, Intact Insurance says that for about 99.5% of its business clients with BI polices, exclusions that say the inability to use or access a property even during a lock-down does not qualify for coverage. Intact officials made those comments during calls with investment banking analysts and not in the context of legal proceedings.
Several business interruption coverage disputes are currently before Canadian courts.
Thomson Rogers announced Monday that it has issued a Canada-wide class action proceeding, claiming $100 million in damages on behalf of Canadian businesses who have been denied business interruption insurance by Aviva Insurance Company of Canada.
Canadian Underwriter contacted Aviva Canada Monday morning seeking comment but had not heard back by Tuesday afternoon. Allegations against Aviva have not been proven in court. [Editor’s Note: We will include information from Aviva as it becomes available.]
This past April, Merchant Law filed a class action lawsuit with the Court of Queen’s Bench of Saskatchewan, naming more than a dozen Canadian insurers. The representative plaintiff is JKT Holdings Ltd., which does business as Regina restaurant Memories, which had to shut its doors this past March due to restrictions arising from the COVID-19 pandemic. In that proposed class action, the plaintiffs could include any Canadian with a business interruption claim resulting from COVID-19 against any of the defendant insurers.
In Britain, the Financial Conduct Authority has filed a claim in a test case with the High Court of England and Wales. FCA wants to resolve what it calls “widespread uncertainty” around the validity of many commercial claims on policies that cover business interruption related to government orders or advice to shut down a workplace.
The FCA is scheduled to serve arguments July 10.
The outcome of the test case in Britain could set a precedent for Canadian courts, said Eric Charleston, Toronto-based associate with Miller Thomson LLP, in an earlier interview.
In any case, the specific policy language is critical in deciding whether coverage applies, Ari Krajden, partner with law firm Kawaguchi Krajden LLP told Canadian Underwriter earlier.