Lackner McLennan Insurance Accused of Breach in Class Action Lawsuit

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!

Novex Insurance Company, Intact Insurance Company and Lackner McLennan Insurance Ltd. are facing a class action lawsuit accusing them of denying policyholders’ claims in bad faith for business interruption losses while they were forced to close their businesses during the COVID-19 pandemic.

Plaintiff Kayla Kyle-Moffat is a registered massage therapist in Vancouver, B.C., and was insured by Novex Insurance. Lackner McLennan is reportedly the largest insurance provider for registered massage therapists in Ontario and British Columbia.

Kayla says that she was not asked to provide Lackner with specific instructions about her insurance coverage. Instead, she “relied on Lackner to use its expertise” to ensure that the insurance coverage she purchased would provide adequate protection for Kayla and her business.

Upon Lackner’s recommendation, Kayla says she “paid a premium” to purchase the Novex insurance policy, and Lackner reportedly received a commission.

On March 21, Kayla’s massage therapy business was forced to close to prevent the spread of COVID-19 in British Columbia. The order was given by Dr. Bonnie Henry, British Columbia’s Provincial Health Officer, and required personal service establishments to close until further notice.

The College of Massage Therapists of British Columbia followed up with its members to clarify that all B.C. RMTs must immediately stop their practices on March 21.

“Any upcoming appointments must be cancelled, and no massage therapy treatment can be delivered until further notice,” the CMTBC wrote.

The City of Vancouver reportedly imposed $50,000 fines to any business that continued to operate without social distancing. Kayla notes that massage therapy cannot be performed while social distancing.

As a result of the COVID-19 restrictions, Kayla says she was forced to close her business and has suffered more than $10,000 in lost profits, which should have been covered by her insurance policy the Lackner Insurance class action lawsuit alleges.

According to the Lackner Insurance class action lawsuit, Lackner’s website represents that all RMTs get $10,000 in coverage for loss or damage to contents at the clinic, contents in transit, contents at home or the patient’s home, loss of income because the clinic is unusable, loss or damage to patient records, theft, and other coverage.

“At all material times, the Plaintiff and Class Members understood that the Policy would offer coverage if they were forced to close their businesses due to fortuitous or unforeseen reasons that were beyond their control,” the Lackner Insurance class action lawsuit alleges.

Kayla argues that her insurance policy was meant to provide “peace of mind” to policyholders, and that the insurer knew that breach of contract would be likely to cause financial hardship for the insured.

According to the Novex Insurance coverage class action lawsuit, Kayla and the other putative Class Members expected that Lackner would help them in good faith make a claim for business interruption under their insurance policies.

However, when Kayla informed Lackner that she would make a claim for business interruption loss, she was reportedly told that there would be no coverage. Lackner allegedly refused to assist her with making a claim.

“Lackner acted in an inappropriate and harsh manner toward the Plaintiff in discouraging her from applying for the business interruption coverage under the Policy and refusing to assist her to do so,” the COVID-19 insurance denial class action lawsuit states.

Kayla says the defendants breached the Insurance Act and acted in bad faith by failing to investigate Class Members’ circumstances and pay for the business interruption losses as set forth in their policies because they have been forced to close due to the COVID-19 pandemic.

Lackner was also negligent because it failed to clarify any misleading claims that were published on its website and failed to assist Class Members with making their claims in a timely manner.

By filing the insurance company class action lawsuit, Kayla seeks to represent herself and a proposed Class of similarly situated Canadians. She seeks the full amount of business interruption compensation available under their insurance policies as well as general damages, special damages, punitive damages, costs, interest, and other relief the court deems just.

The Lackner insurance class action lawsuit seeks punitive damages based on the allegations of bad faith against the defendants.

Intact Insurance is currently facing another COVID-19 insurance coverage class action lawsuit in Montreal.  Other insurance companies are currently taking heat for their failure to pay business interruption losses stemming from closures required during the COVID-19 pandemic.

Have you filed a claim with your insurance company after having to close your business due to the COVID-19 restrictions? Was your claim denied? Tell us your story in the comment section below! 

Kayla is represented by Rice Harbut Elliott LLP.

The Lackner Insurance Class Action Lawsuit is Kayla Kyle-Moffat v. Novex Insurance Company, et al., Case No. VLC-S-S-205979, in the Supreme Court of British Columbia, Canada.

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