Why is Aviva Canada Denying Coronavirus Insurance Claims?

The COVID-19 pandemic seemingly caused the world to grind to a halt in March. As a result, numerous businesses have suffered significant drops in revenue. Many of these businesses have insurance policies that cover business interruption insurance claims, and assumed that their insurers would pay them for these losses. However, Canada’s top indemnity insurers, including Aviva Insurance Canada, are reportedly refusing to pay these coronavirus insurance claims.

What Are Business Interruption Insurance Claims?

Business interruption coverage protects businesses in the event they are forced to close for a period of time. Every policy specifies the types of events that are covered, such as property damage due to fire, flooding or other circumstances. Many policies include protection for the loss of business income due to an infectious disease outbreak. However, Aviva Insurance and other Canadian insurers are allegedly refusing to pay for business interruption losses related to the COVID-19 pandemic and the related shutdowns.

Business interruption insurance is designed to allow business owners to make insurance claims to cover the income lost due to the unexpected event. Insurance companies are reportedly arguing that they are not responsible for paying these coronavirus business interruption claims because their policies do not cover COVID-19, or that the event was an unexpected external event that has prevented the insurers from meeting their contractual obligations.

Coronavirus Business Interruption Causes Loss of Revenue

The effects of the pandemic have been felt across a wide variety of industries. Business interruption insurance could help businesses offset the loss of revenue caused by shutdowns that temporarily closed or restricted the operation of their businesses, the loss of revenue caused by fewer customers allowed into the business due to social distancing advisories, and the loss of revenue caused by addressing COVID-19 contamination on the premises.

Insurance companies are reportedly concerned that the industry may be destabilized if they are required to pay COVID-19 business interruption losses. However, lawyers are skeptical of this claim and suggest that the industry will be able to make up the losses by charging higher premiums.

Why Does Aviva Insurance Deny Coronavirus Insurance Claims?

Some business interruption policies include language that excludes coverage for losses associated with airborne viruses. However, this justification may be insufficient to deny business interruption insurance claims related to the global pandemic because the COVID-19 virus can be transferred to surfaces such as handrails, tables and keyboards and should be covered as business interruption property damage.

Canadian insurance companies are reportedly claiming force majeure and refusing to pay coronavirus insurance claims, claiming that the COVID-19 pandemic is an unexpected external event that has prevented it from meeting its contractual obligations and that they should thus be protected against liability for nonperformance.

However, lawyers are not convinced that force majeure relieves the insurance companies from liability during the COVID-19 pandemic.

“Indemnity insurers are wrongfully refusing to honor their contracts,” solicitor E.F. Anthony Merchant of Merchant Law said. “Business owners intended their insurance to cover against this. Insurance companies should pay.”

Merchant says that the COVID-19 pandemic was a foreseeable event and does not qualify as force majeure. He points to the examples of previous outbreaks such as SARS, MERS and Avian flu which also caused business interruptions.

“The business interruption may be worse than the insurance industry expected, but it is not an excuse justifying a refusal to pay,” Merchant says. “Business is interrupted! Pay!”

Aviva Class Action Lawsuit Challenges Denial of Insurance Claims

Aviva has already been hit with a class action lawsuit Canada accusing it of wrongfully denying contagious disease coverage during the coronavirus crisis. The proposed Class includes certain business owners and self-employed professionals who had their coronavirus insurance claims denied during the COVID-19 pandemic.

Aviva Canada is not the only insurance company to face a class action lawsuit for allegedly wrongfully denying business interruption insurance claims. Co-Operators General Insurance Co., Desjardins Financial Security Life Assurance Co., Economical Insurance, Intact Financial Corp., Lloyd’s Canada, Lloyd’s Underwriters, Northbridge General Insurance Corp., Royal & Sun Alliance, TD General Insurance Co., Wawanesa Mutual Insurance Co., Wynward Holdings and Wynward Insurance Group are also named in a class action lawsuit over business interruption claim denials.

Can I File an Aviva Lawsuit?

If you filed insurance claims with Aviva Canada for business interruption losses caused by the COVID-19 pandemic, and Aviva denied the claim, you may qualify to join a COVID-19 business interruption insurance class action lawsuit investigation to fight for the compensation you may be entitled to receive. A successful case could result in an Aviva class action settlement that provides payment to businesses for their coronavirus business interruption losses.

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