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Restaurant owners being denied insurance claims amid COVID-19

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!

As businesses across Canada begin to re-open to the public, COVID-19 related class action lawsuits are increasing in numbers. The Superior Court of Québec has been somewhat bombarded with COVID-19 insurance class actions, among them applications for authorization of class actions against Intact Insurance, L’Unique Assurances Générales and now Promutuel Réassurance.

The representative plaintiff, Restaurant Elixor, is a trendy Laval restaurant located just north of Montreal. The restaurant purchased an all-risk commercial insurance policy with the defendant, Promutuel.

Following the Quebec government’s decision to close all non-essential businesses amid the COVID-19 health crisis, Restaurant Elixor was forced to close its doors on March 16. The restaurant employs 50 staff members and was devastated by the COVID-19 business restrictions. Its losses totaled $570,000 since the insurance class action lawsuit was filed. Like many other businesses, it sought relief through an insurance claim with its commercial insurer, Promutuel.

Restaurant Exilor had an all-risk commercial insurance policy; the policy automatically covers any risk that is not specifically excluded, and covers business interruption claims. Nevertheless, Promutuel denied the plaintiff’s insurance claim because there were no “damages directly caused to the property,” an assertion echoing numerous COVID-19 insurance denials. Importantly, the plaintiff’s insurance policy did not contain an exclusion clause for loss resulting from a pandemic.

“The Defendant’s grounds to deny altogether coverage under the Policy are fallacious, wrong, abusive and run contrary to the rules of contractual interpretation applying to an insurance contract in the province of Quebec,” argues the COVID-19 insurance class action lawsuit proposal.

The COVID-19 insurance class action lawsuit covers all Quebec restaurant and bar businesses who were forced to close their operations or limit them to take-out and delivery services as a result of COVID-19 and ensuing government directives. Class Members must have sustained losses as a result of the COVID-19 closures and must have been denied coverage for business interruption insurance by Promutuel, or “have yet to file a claim for Business Interruption Insurance as a result of a pre-emptive blanket denial of coverage by Promutuel.”

Business interruption insurance claim denied amid-COVID-19The COVID-19 insurance class action seeks payment of an amount equal to Class Members’ business interruption losses during the COVID-19 crisis, beginning on March 16, 2020, as well as legal costs and other damages deemed fit by the Court.

COVID-19 Business Interruption Insurance

Most commercial insurance claims arising out of the COVID-19 pandemic seem to be business interruption insurance claims. Typically, insurers will agree to pay for the actual loss of business income sustained by policyholders due to the interruption of business operations. However, many such policies will require the business interruption to result from a direct physical loss, damage, or destruction to property, which was caused by a covered peril. Therefore, physical damage to the premises is a threshold requirement, as argued by many insurers.

COVID-19 business interruption claims may therefore raise difficulties in terms of establishing a direct physical loss or damage from COVID-19. Additionally, business interruption policies may often contain exclusion clauses for perils such as disease or pandemics.

Nevertheless, business interruption insurance policies can contain endorsements that provide protection for business interruptions caused by a disease or health crisis. In such instances, businesses with these endorsements in their policy are in a stronger position to assert their claims.

In light of the abnormal and widespread nature of COVID-19, some policyholders are opting to test the limits of their business interruption policy in court. A proceeding has already been commenced by a Louisiana restaurant, Oceana Grill, who is seeking a declaratory judgment requiring Lloyd’s of London to provide coverage under an “all risk” policy for losses incurred as a result of COVID-19. Oceana asked the Court to “affirm that because the policy provided by Lloyd’s does not contain an exclusion for a viral pandemic, the policy provides coverage to plaintiffs for any future civil authority shutdowns of restaurants in the New Orleans area due to physical loss from Coronavirus contamination.”

Bearing in mind the insurance law novelties and issues raised by COVID-19, only time will tell how courts react to COVID-19 insurance class action lawsuits.

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 Spiegel Sohmer Inc.

The COVID-19 Promutuel Class Action Lawsuit is 9092-1651 Québec inc. d.b.a. Restaurant Elixor v. Promutuel Réassurance d.b.a. Promutuel Assurance, Case No. 500-06-001067-202, in the Superior Court of Québec, District of Montreal, Canada.

Join a Free Pandemic Business Interruption Insurance Potential Lawsuit

If you are a B.C. business owner who was denied business interruption insurance coverage after closing due to COVID-19, you may be eligible to join this COVID-19 business interruption insurance class action lawsuit investigation.

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One thought on Promutuel Facing COVID-19 Insurance Class Action Over Insurance Denials

  1. Top Class Actions says:

    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!

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