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Toronto restaurant files lawsuit against insurance company over denied COVID-19 losses claim

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!

Another insurance company has been hit with a lawsuit over a denied COVID-19 claim, this time by a Toronto restaurant owner and chef who says that the insurance company denied his claims for loss of profit during the pandemic.

The plaintiff, Hemant Bhagwani, owns several Toronto area restaurants, according to the Brampton Guardian, employing hundreds. He says that his businesses had to shut down in the wake of the coronavirus. He claims that he pays $700,000 in rent each month and does not see any lasting relief in the future. Hemant told reporters that restaurants like his run on slim profit margins and employ many, making them very susceptible to the impacts of COVID-19 restrictions on businesses and social distancing requirements.

In the denied insurance claim lawsuit, Hemant says that he made several COVID-19 claims for lost profit, expenses, and other losses experienced by his restaurants, but his insurer, Allianz Global Risks, denied his claims.

The denied insurance claims lawsuit alleges that the Toronto restaurant owner’s policy with Allianz covered “caused by order of civil authority to retard or prevent a conflagration or other catastrophe.” The complaint argues that the insurance company is obligated to cover the losses experienced by the Toronto restaurant owner under the terms of the policy; however, Allianz is claiming that, since the coronavirus pandemic has not damaged the properties, the insurance policy does not apply to losses resulting from COVID-19 restrictions, Hemant told reporters.

The Toronto restaurant owner filed the lawsuit for denied COVID-19 claims for several of his businesses and says he plans to file additional actions for others.

“In all this I realized the insurance companies were not budging,” Hemant told Brampton Guardian reporters. He says he hopes other restaurant and small business owners will follow his lead holding insurers accountable for their COVID-19 losses.

The Toronto restaurant owner’s lawsuit over his denied COVID-19 claims is seeking money damages that would amount to his loss of profits over the course of a year, along with 90 days-worth of payroll expenses and $200,000 in punitive damages.

The plaintiff told Brampton Guardian reporters that the lawsuit is about more than money, however. Restaurants Canada has reported that a huge number of restaurants have already permanently closed in the country, according to recent survey results. The Toronto restaurant owner who filed the lawsuit told reporters that he had heard of other business owners in the same situation who talked about taking legal action, but no one had taken that step yet.

“I hope I can start something,” he told reporters. “I win or lose, it’s not the point.”Server holding closed sign regarding the Toronto restaurant filing a lawsuit against its insurance company over denied COVID-19 losses claims

Restaurant and Business Owners File Class Action Lawsuits Over Denied COVID-19 Claims

Several proposed class action lawsuits have been filed against insurance companies over allegedly improperly denied COVID-19 claims. In April, the Merchant Law Group filed a massive lawsuit against the largest insurance companies in Canada.

The lead plaintiff in that class action lawsuit is a restaurant located in Regina, Sask. According to the owner of the restaurant, his COVID-19 claim for losses due to coronavirus restrictions was denied because the insurance company claimed the pandemic was a “force majeure,” or an unforeseeable circumstance.

The class action lawsuit claims that insurance companies using this reasoning to deny COVID-19 claims are wrong. The lawyer representing the plaintiff and proposed Class Members says that, while the losses related to COVID-19 restrictions may be greater than anticipated, a pandemic can certainly be foreseen.

“The insurance companies are trying to wiggle out of paying based on that this is not anticipated,” the lawyer told CBC News. “It’s a pandemic. It’s so terrible. [But] the reality is they had to know this kind of thing was going to happen because it has happened before.”

Another proposed class action lawsuit has since been filed by Montreal wholesale construction material company. The plaintiff claims that their COVID-19 claim under their business interruption insurance policy was denied. The business claims that it has lost $1 million since the introduction of restrictions implemented to stop the spread of the virus.

In this case, the business owner was surprised that the insurance company denied the COVID-19 claim, reasoning that the policy did not apply because there was no physical damage to the property.

Insurance Business Canada reports that business owners may have a tough road ahead of them for their COVID-19 claims based on business interruption. According to the industry publication, most business interruption policies traditionally require that policy owners show some type of physical damage in order to make the insurance companies pay out. All policies are different, notes the report, and may be open to interpretation.

Do you own a restaurant or a small business? Have you filed a COVID-19 claim with your insurer? Tell us what happened in the comment section below!

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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2 thoughts onToronto Restaurant Sues Insurance Company Over Denied COVID-19 Claims

  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!

  2. simon says:

    Since there is no damage to the property, the business interruption does not apply, it is clearly stated in the wording. Sue the dumb government that forced small business to stop operating instead.

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