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Lloyd’s Underwriters has been hit with a proposed class action lawsuit alleging it has wrongfully refused to pay for rental income losses related to the COVID-19 pandemic.
Plaintiff Wataga Properties Inc. operates a vacation rental business based out of Calgary, and says it was insured with an “all risks” commercial insurance policy provided by Lloyd’s.
Wataga, which reportedly owns five properties near Canmore, Alberta, says its vacation rental business was affected by the restrictions imposed by Alberta to curb the spread of COVID-19 in March and that Lloyd’s wrongfully refused to pay its business interruption insurance claim.
Plaintiff: COVID-19 Restrictions Led to Cancelled Reservations
According to the business interruption class action lawsuit, Wataga lost several reservations due to these COVID-19 restrictions, causing the business to experience a significant reduction in rental income between March and May.
Alberta’s COVID-19 restrictions included a mandatory 14-day quarantine for travelers entering Alberta from outside of Canada or who traveled on flights with a confirmed case of COVID-19. Although travel within Alberta was permitted, the province imposed physical distancing and gathering restrictions.
These COVID-19 restrictions caused many people to cancel their travel plans, causing Wataga to lose several reservations. Alberta has since eased some of the most stringent COVID-19 restrictions, but Wataga says it continues to suffer an ongoing loss of rental income.
“COVID-19 and the resulting orders to close the border, restrict travel, and close businesses were fortuitous unforeseen circumstances, beyond the control of the Plaintiff and Class Members, and resulted in the Plaintiff and Class Members sustaining ‘Damage’ as defined in the Policy,” the complaint states.
However, Lloyd’s Underwriters has reportedly refused to pay Wataga for the lost rental income it has suffered due to the COVID-19 pandemic, according to the business interruption class action lawsuit.
Class Action Lawsuit: Lloyd’s Refusal to Pay is a Breach of Policy
Wataga says its Lloyd’s insurance policy should cover lost income stemming from the COVID-19 pandemic and that failure to pay constitutes a breach of the insurance policy.
“When the reservations were cancelled, the Plaintiff had peace of mind because the Policy is an all-risk policy which does not exclude coverage for virus or pandemic,” the Lloyd’s Underwriters class action lawsuit says.
After Wataga demanded payment of the rental income coverage payable under the Lloyd’s insurance policy, a Lloyd’s representative reportedly sent Wataga a letter stating that the claim must involve an order from a civil authority that prohibits access to the property “due to direct physical loss or damage.”
In addition, Wataga says the letter stated that the policy was subject to a “Communicable Disease Endorsement.” After reviewing his Lloyd’s insurance policy, the plaintiff found that it does not contain such an endorsement.
“There is nothing in the Policy that excludes coverage for losses arising due to pandemic or virus outbreak,” the statement of claim asserts.
“At all material times, the Plaintiff and Class Members understood that the Policy would offer coverage if they lost rental income due to fortuitous or unforeseen events that were beyond their control but not excluded by the Policy.”
Wataga filed the business interruption insurance class action lawsuit on behalf of itself and a proposed Class of individuals and companies in Canada who had a Lloyd’s Underwriters insurance policy similar to Wataga’s and who were denied business insurance coverage by Lloyd’s despite experiencing a loss in income due to COVID-19 restrictions imposed by the government.
COVID-19 Business Interruption Class Action Lawsuits
The COVID-19 pandemic has caused significant disruption in Canada. Wataga is not the only company to take its fight over business interruption coverage during the COVID-19 pandemic to the courts. Numerous Canadian insurance companies are currently under fire for allegedly refusing to pay policyholders for lost income caused by government regulations intended to slow the spread of COVID-19.
Aviva Insurance has been targeted by several proposed business insurance class action lawsuits accusing the insurer of wrongfully denying claims related to COVID-19 restrictions that affected their ability to do business.
Business owners in British Columbia whose business interruption insurance claims for losses stemming from COVID-19 restrictions were denied can submit their information for a free case evaluation by experienced lawyers.
Have you cancelled vacation plans due to COVID-19 restrictions? Do you think insurance companies should pay for business interruption losses related to COVID-19 cancellations? Tell us your thoughts in the comments section below.
Wataga Properties is represented by Clint Docken and Mathew Farrell of Guardian Law Group LLP and by Anthony Leoni of Rice Harbut Elliott LLP.
The Lloyd’s Underwriters Business Interruption Class Action Lawsuit is Wataga Properties Inc. v. Lloyd’s Underwriters, Case No. 2001-10774, in the Court of Queen’s Bench of Alberta, Canada.
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