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Another business is suing Aviva Insurance Company after being denied coverage for business interruption during the pandemic, adding to a flurry of class action lawsuits against them.
“Broad Form Perils” Insurance Coverage Denied During COVID-19
Quebec restaurant L’Académie Crescent filed the class action lawsuit against Aviva Insurance Company of Canada, Everest Insurance Company of Canada, Sovereign Insurance, and HDI Global Specialty SE after the business’s forced shut down due to the pandemic, but they were refused insurance coverage.
According to the Aviva denied coverage class action lawsuit, the policy says it insures the loss of business income if the government restricts access to the business due to an infectious disease outbreak, which was the case during the spring COVID-19 lockdowns.
The business claims it holds an insurance policy that covers “all-risk” and there is no exclusion clause within the contract, according to the Aviva denied coverage class action lawsuit Canada. The insurance policy’s “broad form perils” clause does not exclude pandemics. Furthermore, the policy specifically covers damages when the business’s access is restricted due to an outbreak of a contagious disease.
L’Académie Crescent held a policy that includes business interruption insurance. The policy’s indemnity agreement reads, “In the event that the business shall be interrupted as a direct result of ‘damage’, the Insurer shall pay to the Insured the actual loss of ‘business income’ sustained during the ‘indemnity period’ in consequence thereof, in accordance with the terms and conditions of this Form.”
“Non-Essential” Quebec Businesses Forced to Close
In March 2020, the coronavirus outbreak was labelled as a global pandemic. In Quebec, retailers, bars, and restaurants were deemed to be non-essential businesses and therefore were involuntarily closed by the government authorities. The Aviva denied coverage class action lawsuit states that the Quebec government considered restaurants and bars hotspots of risk for customers and staff.
L’Académie Crescent was closed on or about March 23, 2020, to June 22, 2020, due to the lockdown orders.
The restaurant communicated with its insurers and made a claim for business interruption coverage, but on July 30, 2020, the business received a coverage denial letter.
According to the Aviva denied coverage class action lawsuit, the insurance companies say they are entitled to deny the restaurant’s claim in its totality.
The insurance policies allege the following:
- The policy covers certain kinds of losses and is subject to exclusions
- The policy includes a protection against “loss of business revenues” for direct material damages caused to the premises
- The policy includes an extension that protects the property from government-mandated restrictions, but only when the order is due to direct damage to neighboring businesses.
According to the Aviva denied coverage class action lawsuit, the insurers say L’Académie Crescent’s policies hold these stipulations, therefore they are not covered.
Aviva Class Action Lawsuit Claims Insurers Acted in Bad Faith
The Quebec restaurant and other proposed Class Members purchased their insurance policies with expectations that they would be covered if an unforeseen circumstance shut down their businesses. During the COVID-19 pandemic, L’Académie Crescent believed that their insurers would honor their obligations in good faith.
The Aviva denied coverage class action lawsuit calls the total denial of coverage “fallacious, wrong, abusive, and…contrary to the rules of contractual interpretation.”
The lawyers representing the class action lawsuit Canada believe the Class Members are “entitled to the fullest extent” of their policies for business interruption caused by the pandemic.
The Aviva denied coverage class action lawsuit is seeking business interruption damages for violations of contractual agreements in an amount that will be determined by the Court.
The affected businesses who have been denied business interruption insurance coverage would like to be compensated for damages from March 23, 2020, including interest and other possible damages the Court decides if it is determined that the insurers’ denials were unlawful or abusive.
Aviva Insurance Denied Coverage Lawsuits Continue to Grow
This class action lawsuit is far from the first of its kind. Business interruption class action lawsuits in Canada against Aviva and other insurers have been multiplying since the pandemic left thousands of businesses without income, and those businesses’ insurance companies have left them without coverage.
Aviva Insurance company has allegedly argued that they can deny claims because the specific language in their contracts does not cover the coronavirus pandemic. However, this claim may not be legitimate in courts because many businesses hold “all risk” policies that cover closures due to contagious diseases. In essence, the insurance company denials might not hold up in court.
The pandemic has created uncertainty in Canada and all over the world. In this unforeseen situation, there have been questions about legalities and guidelines in almost every business sector amid COVID-19. These types of technicalities have businesses in search of clarity as the pandemic continues.
Are you a business owner who was denied insurance coverage by Aviva Insurance Company or any other insurance company during the pandemic? Do you plan on joining a class action lawsuit? Let us know in the comment section below!
L’Académie Crescent and proposed Class Members are represented by Laurent Debrun and Éliane Dupéré-Tremblay of Spiegel Sohmer Inc.
The Canada Aviva Insurance Company Denied Coverage Class Action Lawsuit is 9391-2186 Québec Inc. DBA Restaurant L’Académie Crescent v. Aviva Insurance Company of Canada, et al., Case No. 500-06-001091-202, in the Superior Court of Québec, Canada.
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