The Merchant Law Group LLP has launched a nationwide class action “on behalf of Canadian business owners and certain self-employed professionals who are being denied business interruption insurance during COVID-19 by the following insurers: Aviva, Co-operators Insurance, Desjardins, Economical Insurance, Federated Insurance, Intact, Lloyd’s, Northbridge, Royal & Sun Alliance, SGI Canada, TD General Insurance, Wawanesa Mutual Insurance, and Wynward Insurance Group.”
According to the firm’s website, companies who provide business interruption insurance “have shirked their obligations and are refusing to honor business interruption coverage.”
The firm noted that business interruption insurance “permits a business owner to collect income that the business would have generated due to an interruption in the business,” which may include: “loss of revenue caused by a decrease or elimination of business due to social distancing advisories; loss of revenue caused by federal, provincial and municipal orders that restrict operations or cause a business to close; [and] loss of revenue caused by physical damage to business premises due to contamination from Covid-19.”
Meantime, optometrists in Ontario have launched an online petition demanding optometry insurers approve business interruption claims.
The petition, which has received over 7,000 signatures so far, explains that the “self-regulatory authorities and provincial health authorities issued directives in mid-March ‘strongly recommending’ the suspension of non-urgent care.” Optometrists complied but suffered huge losses to income.
The petition notes that insurance claims are being denied because the “viral spread does not constitute ‘physical damage,’ even though there is case law stating that the presence of foreign substances in the air may constitute physical damage; we closed ‘preventatively,’ despite provincial orders for the mandatory closure of non-essential services; and the civil or emergency orders do not ‘prohibit’ access to our premises, as we are still required to provide emergency care.”
“We have paid hefty insurance premiums in good faith for decades. When asked, we did the right thing for the health of our patients, our employees and our communities. Now we are asking you to do the right thing and honour/approve our claims for business interruption losses,” the petition states.

Gord McGuire, Adair Goldblatt Bieber LLP
“There are a fortunate few businesses that have express coverage for pandemics or that have endorsements for infectious diseases, or that have even cancellation insurance that will respond, but we are finding that most businesses don’t have that kind of specialty coverage and they, instead, need to look to their property insurance coverage to see if it responds,” he added.
McGuire said that “in order for property insurance coverage to respond there needs to be some sort of physical trigger.”
“We’re finding that companies that have suffered a loss from actually having a sick person at their premises have an argument for coverage and similarly if there is a sick person at a nearby premises, or a supplier’s premises, there are potential arguments for coverage. But, if it is simply a case of the pandemic in general hurting the business, we’re finding few businesses actually have coverage,” he noted.
McGuire said that businesses, such as the optometrists who were recommended to suspend non-urgent care, may have more of a leg to stand on because many policies have provisions addressing “interruption by civil authority.”
“I find that the wording of those provisions varies significantly and so it’s worth doing a ‘control f’ of one’s policy to see what it says about civil authority. But, if you do have wording in your policy that addresses shutdowns or restrictions imposed by a civil or governmental authority, that certainly can be a pathway to coverage,” he explained.
McGuire noted that legal advisers should be “acting quickly to advise their clients because there can be time restrictions in policies with respect to notifying insurers.”
“I also think that there’s been a general message in the legal and even mainstream press that insurers are unlikely to respond to coronavirus loses, but notwithstanding that, I think that legal advisers should be hesitant to write off any hope of recovery until they’ve both investigated the wording of the policy and the specific cause of the loss,” he added.
McGuire said it’s going to be “very interesting” in the future with respect to whether or not there will be coverage for these types of claims going forward.
“When you read these policies, it seems that many policies simply did not factor this [global pandemic] in as a risk whatsoever. So, it will be very interesting to see if policies offered by insurers in the future will provide some type of coverage for pandemics now that this is part of the collective public consciousness,” he added.
Correction: Travelers Canada was named in this article as part of the class action from Merchant Law Group LLP in error. Their name has been removed to correct the record.
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