Intact Insurance Company is facing another class action lawsuit accusing the insurer of denying coverage to policyholders for losses related to the COVID-19 pandemic.
The plaintiff 9281-2536 Inc. DBA 21st Century Foods is a Montreal catering company that operates seven cafeterias. According to the Intact Insurance class action lawsuit, 21st Century Foods has more than 45 employees.
21st Century Foods reportedly had an all-risk commercial insurance policy with Intact Insurance. The policy contains business interruption insurance, according to the Intact Insurance class action lawsuit.
In March 2020, COVID-19 was declared a global health pandemic. As a result, many of Quebec’s retail businesses such as restaurants, bars and catering companies were declared non-essential services and were forced to close.
“The Québec government considered that restaurants, bars and catering services presented a substantial risk for patrons, staff and the public, since the virus may be present on the premises, or could be brought into the premises and easily spread among the various people who attend at the premises, either as patrons, visitors or staff,” the Intact Insurance class action lawsuit states.
On March 16, 21st Century Foods reportedly had to substantially limit its operations due to governmental orders to combat the spread of COVID-19. Only one of its cafeterias remained open, but it reportedly serviced only 100 essential employees instead of 600 employees.
On April 14, 21st Century Foods notified its broker that it would file a notice of claim with Intact Insurance for business interruption insurance. However, before it could file the claim, Intact Insurance reportedly wrote to 21st Century Foods’ president to say that it would not indemnify the catering company for business interruption losses.
“In order to trigger the application of your Business Interruption coverage, you must have sustained direct physical loss or damage to insured property because of a covered peril,” the letter from Intact Insurance reads. “The business interruption loss that you are suffering, because of the total or partial closure of your business, as a result of a recommendation or order from civil authorities, does not constitute a loss within the meaning of the contract since it is not caused by physical damage to insured property as a result of a covered loss.”
21st Century Foods says it paid for business interruption insurance under the expectation that Intact Insurance would honor its contractual obligations if an unforeseen and unintentional circumstance occurred that caused severe business interruption losses. The government’s order to close all non-essential businesses constitutes an unintentional occurrence that has led to severe business interruption losses and should therefore qualify for coverage, 21st Century Foods argues in the class action lawsuit.
The Intact Insurance policy did not contain a provision expressly excluding business interruption losses caused by a pandemic or by the government ordering a shutdown, 21st Century Foods argues in the COVID-19 insurance coverage class action lawsuit.
“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 Québec,” the Intact Insurance class action lawsuit says.
According to the Intact Insurance class action lawsuit, 21st Century Foods has suffered damages of more than $270,000, an amount that will increase as COVID-19 shutdowns continue.
21st Century Foods filed the COVID-19 insurance coverage class action lawsuit on behalf of itself and a proposed Class of Québec businesses engaged in food service (including restaurants, bars, cafeterias, food take-out and catering services) that were forced to close or substantially limit their operations due to COVID-19 restrictions, and who sustained a loss but were denied coverage by Intact Insurance for business interruption insurance.
The proposed Class also includes the businesses listed above that have not filed a claim for business interruption insurance due to receiving a preemptive blanket denial from Intact Insurance.
21st Century Foods is asking the court to pay all Class Members the amount they each suffered in COVID-19 related business interruption losses, plus interest.
This is not the first COVID-19 business interruption coverage lawsuit that Intact Insurance has faced. In March, a wholesale construction material business sued the insurer for refusing to pay its business interruption claim.
Other insurers are also under fire for denying business interruption claims during the COVID-19 pandemic, including L’Unique Assurances Générales and Promutuel Réassurance.
Are you a business owner who had to close due to the COVID-19 restrictions? Did you file a claim with your insurance provider? Tell us your story in the comment section below!
21st Century Foods is represented by Laurent Debrun of Spiegel Sohmer Inc.
The Intact Insurance COVID-19 Coverage Class Action Lawsuit is 9281-2536 Inc. dba 21st Century Foods v. Intact Insurance Company, Case No. 500-06-001070-206, in Superior Court of Québec, in Montreal, Canada.
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