Did Novex Insurance Company Deny Your COVID-19 Business Interruption Claim?

Novex Insurance Company Canada has reportedly been denying business interruption claims and may even be sending preemptive denial letters to some policyholders in the wake of the coronavirus pandemic. Government-mandated restrictions led to slowdowns and even closures of many businesses. Business owners say Novex and other insurance companies’ denial of their business interruption claims have put them in economic peril as the pandemic drags on.

What is Business Interruption Insurance?

According to the Insurance Bureau of Canada, business interruption insurance policies cover “losses caused by the perils listed in your policy. An all risk policy provides protection against loss caused by any risk that is not specifically excluded from your policy.” Floods, fires, earthquakes, or windstorms are common events covered by these policies.

Business owners can make claims for physical loss or damages, payroll and revenue losses, supply chain losses, and loan payment losses under most business interruption insurance policies. Claims may also be made to cover costs due to the unexpected event, such as fixed costs, relocation, and other expenses.

Why Does Business Interruption Cover Some Claims and Not Others?

Coverage under a business interruption policy depends on the terms of that policy. According to the Insurance Bureau of Canada, there are two main types of business interruption insurance: limited indemnity policies and extended “all risk” policies.

Limited indemnity policies have more restrictive time periods in which they pay out losses, while all risk policies may payout until the business returns to profitability. To get any kind of payout, the insurer must accept the business interruption claim; however, in the wake of COVID-19, some business owners say that Novex Insurance Company and others are denying their claims, telling business owners that their policies do not cover pandemics.

According to the Insurance Bureau of Canada, business interruption insurance generally covers losses attributed to physical damage to business property. Business owners say that COVID-19 led to a business interruption situation that should be covered by their policies; however, many insurers beg to differ.

What Do the Courts Say?

While business owners say they are experiencing a flood of interruption insurance claim denials, most of these allegations have not yet made it to Canada’s court system; however, a recent decision by a court in England may provide some guidance.

The English High Court reportedly held several test cases in which business owners alleged their claims for losses due to COVID-19 restrictions were improperly denied by insurance companies. The High Court concluded that the provisions of most business interruption insurance policies covered coronavirus business losses.

Reportedly, the insurance companies attempted to argue that the losses suffered by the businesses needed to take into account that COVID-19 restrictions negatively impacted entire regions and should reduce business loss claims. The High Court disagreed, finding that, under most policies, insurance companies cannot point to external factors when calculating business losses for an interruption claim. However, experts say that policyholders will still need to review the terms of their insurance contracts to be sure.

Two decisions out of Ontario courts have also weighed in on the issue of denied business interruption insurance claims. Generally, the courts reportedly found in favor of the business owners who alleged that their claims for losses due to weather events were improperly denied by insurance companies.

In one case, the Ontario Superior Court of Justice sided with the business owner, refusing to allow Factory Mutual Insurance to deny a claim based on an exemption to an all-risks insurance policy.

The Ontario Court of Appeals also rejected an exclusion an insurance company used to support their denial of a business interruption insurance claim.

Novex Insurance Company Class Action Lawsuit

COVID-19 related business interruption insurance lawsuits have been filed in Canada. In fact, Novex Insurance has been named as a defendant in a class action lawsuit alleging it improperly denied a B.C. business owner’s interruption claim. The plaintiff, a massage therapist in Vancouver, says that she paid premiums to Novex for a business interruption insurance policy. However, the plaintiff claims that when her business was shut down because of the coronavirus pandemic, Novex and related insurance companies denied her claim and refused to help.

The class action lawsuit is seeking punitive damages against Novex and other insurance companies. The proposed lawsuit seeks to represent other business owners who are facing denied business interruption insurance claims in British Columbia and the rest of Canada.

If you’re a B.C. business owner who was denied business interruption insurance coverage after closing due to COVID-19, a lawyer can help you fight for the compensation you deserve! Submit your information on this page and a lawyer will review your case for free. You may be able to join this COVID-19 business interruption insurance class action lawsuit investigation. 

Read More Lawsuit & Settlement News:

• Dodge Ram 1500 Class Action Lawsuit Alleges EGR Cooler Defect
• Facebook “Secretly and Continually” Accesses Instagram Users’ Camera, Class Action Lawsuit
• Long Term Disability Lawyer | Insurance Claim Denial Help
• Pandemic Business Interruption Insurance Canada Potential Lawsuit