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UPDATE: The Top Class Actions Canada Coronavirus Business Interruption Insurace Coverage investigation is now open. If you are a British Columbia business owner who was forced to temporarily close due to COVID-19, and had your insurance claim denied, submit your information here!
Hard hit by the COVID-19 crisis, a Montreal wholesale construction material business, Panex-El, turned to its insurance policy for help, but was shocked to find out that its insurer, Intact Insurance, refused to pay for the business interruption claim. A class action lawsuit against Intact Insurance, which could impact thousands of businesses, is now before the Superior Court of Quebec.
Luc Savard, small business owner of Panex-El, was forced to close his business owing to the health emergency declaration by the Quebec government on March 24, according to the class action proposal. Luc’s business suffered losses of over $1 million since the beginning of the pandemic.
In an attempt to temper his losses, Luc filed an insurance claim with his business insurer, Intact Insurance, for business interruption and loss of profit due to “force majeure,” in other words, for reasons beyond his control. Intact Insurance, however, declined to honour Luc’s policy, claiming that there was no physical damage to his property, and would therefore refuse his claim.
“We expected to have discussions, not a refusal like that,” Luc told La Presse. According to the Class lawyer, Fredy Adams, Intact Insurance’s “excuse is that it’s not covered by the insurance policy. We find that deplorable. The policy is clear: it covers business interruption claims.”
The Intact Insurance class action proposal highlights that the plaintiff, is not the only insured business to suffer as a result of the forced interruption of its business activities due to the health emergency. The proposal explains that many other businesses were likewise illegally deprived of the benefits of their insurance policy with Intact Insurance.
Members of the class action include Panex-El and any person or company “owning a business insurance policy with the defendant and who has suffered operational losses or additional expenses due to COVID-19.” Thousands of businesses can consequently join the class action, as Intact Insurance controls approximately 25% of the insurance market in Quebec, according to the class action lawsuit proposal.
Coverage Exclusions
Panel-Ex had an “all risks” insurance policy, which covers, as its name suggests, any risk that can impact the insured property that is not explicitly omitted by the contract. This means, states the Intact Insurance class action proposal, that under this insurance policy, coverage exclusions must be “expressly stated” in the policy.
“In this case, the policy does not expressly exclude losses resulting from the presence of COVID-19… and the coronavirus health emergency.”
“It goes without saying that the imposition of the [emergency government] measures and the fact that insureds could not access their business premises had an impact on the economic activities of Class members,” explained Adams.
“Indecent” COVID-19 Reactions by the Insurance Industry
Adams declared Intact Insurance’s behaviour to be “indecent” and calls on the industry to “lend a hand” during this health crisis. “Insurance companies also need to be part of this collaborative effort and they don’t seem to want to,” said the lawyer in an interview with La Presse.
Intact Insurance is not the only insurance company hit with a class action lawsuit for refusing to pay up business interruption claims. Class actions have been filed against Canada’s leading indemnity insurers for breach of contract due to their refusal to pay similar claims arising amid the COVID-19 pandemic.
Among the insurance companies named as defendants in the nationwide Canadian insurance class action lawsuit include, Aviva Canada Inc., Desjardins Financial Security Life Assurance Company, Economical Insurance, Intact Financial Corp., Lloyd’s Canada, Lloyd’s Underwriters, Northbridge General Insurance Corp., Royal & Sun Alliance, TD General Insurance Co., Wawanesa Mutual Insurance Co., Wynward Holdings, Wynward Insurance Group, and Co-Operators General Insurance Company.
Many insurance companies are relying on the “force majeure” clause, which can allow them to legally breach a contract due to unforeseeable circumstances preventing them from fulling their contractual obligations. However, Tony Merchant of the Merchant Law Group says that the fact that current business interruptions are worse than expected does not justify the insurance industry’s refusal to pay client claims.
Luc Savard nevertheless remains optimistic during these trying times. “I think that insurance companies have a role to play in this recovery and, above all, in safeguarding Quebec businesses. Many small and medium-sized businesses are at risk,” he says.
Are you a business owner in Canada whose business has been impacted by the COVID-19 pandemic? Have you filed an insurance claim that was subsequently refused? Tell us your story in the comment section below!
The plaintiffs are represented by Adams Avocat Inc.
The COVID-19 Intact Insurance Class Action Lawsuit is Panex-El v. Intact Insurance, Case No. 750-06-000006-202, in the Superior Court of Quebec, Canada.
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UPDATE: The Top Class Actions Canada Coronavirus Business Interruption Insurace Coverage investigation is now open. If you are a British Columbia business owner who was forced to temporarily close due to COVID-19, and had your insurance claim denied, submit your information here!
Do I have to make a claim to be a part of a class action lawsuit?
I have not filed a claim because my insurance said I couldn’t when I called