Ontario judge certifies class action against business interruption insurance providers

A class action lawsuit against Canadian insurance companies providing business interruption insurance, brought forth by law firms Koskie Minsky LLP and Merchant Law Group LLP, was partially certified by an Ontario Superior Court judge, August 20, 2021. 

Firms named as defendants in the class action include: the Co-operators General Insurance Company, Continental Casualty Company, Desjardins General Insurance Services Inc., Economical Mutual Insurance Company, Federated Insurance Company of Canada, Gore Mutual Insurance Company, Intact Insurance Company, Lloyd’s Canada Inc., Marc Lipman as attorney-in-fact in Canada for Lloyd’s Underwriters, Lloyd’s Underwriters, Northbridge General Insurance Corporation, Novex Insurance Company, Royal Sun & Alliance Insurance Company of Canada, SGI Canada Insurance Services Ltd., Travelers Insurance Company of Canada, Wawanesa Mutual Insurance Company and the Wynward Insurance Group.

According to Koskie Minsky, the class proceeding was partially certified against all defendants except Lloyds, on three common issues concerning how physical loss or damage language and business interruption insurance policies should be interpreted.

Koskie Minsky in its summary of the class action, states that it is alleged that Canadian insurance companies have breached their contracts with business owners by refusing to pay for business interruptions caused by the coronavirus pandemic. “The plaintiffs further allege that the insurance industry has conspired to deny coverage before claims are even made. Negligence and breaches of the duty of good faith are also alleged,” they write.

In a recorded statement to would-be class members, the firm says the certified class generally includes businesses, except those in Quebec, who contracted with one of the defendants for business interruption insurance and made a claim before August 31, 2021 under that policy for losses due to actual or suspected infection, due to the presence of COVID-19, or because of a civil authority’s order regarding COVID-19. “Once the trial of these common issues is resolved, the plaintiff can proceed to certify any remaining combinations,” they state. 

The Notice of Action filed with the Ontario Superior Court of Justice in July 2020 states that the plaintiffs, on their own behalf and on behalf of all class members, seek a number of orders and declarations, including a declaration that each of the defendants acted in bad faith, a declaration that the defendants are liable for damages caused by their breaches of contract, breaches of common law duty of care, conspiracy and collusions and acting in bad faith. The plaintiffs also seek a declaration “that each of the defendants were unjustly enriched in selling business interruption insurance and not honouring the terms of their policies in regards to this product.” 

The notice of action further states that “each of the defendants' conduct in refusing to honour their insurance agreements with the class members represents an industry-wide, collective and common wrong. Their conduct undermines the very purpose of this form of insurance coverage.”