Covid-19 & Business Interruption Insurance (BI)
We understand that certain clients have been advised by their brokers/insurers that their current policy does not provide any coverage of BI resulting from Covid-19. Reasons include it is an “Act of God” and/or “There is no physical damage to the property”.
A recent decision by the Ontario Superior Court of Justice suggests that there may be coverage in the absence of physical damage. We are not lawyers but understand that this case was both complex and can be appealed. Furthermore, we have seen law firms come out on both sides of the decision as it relates to coverage of BI stemming from Covid-19.
Given the dynamic situation we find ourselves in, we understand that this matter will need to be assessed on a case by case basis. We suggest that clients discuss placing the insurer on notice with their broker and having the response, including reference to the appropriate section of the policy, in writing. Additional issues to discuss with your broker include the following:
- Nature of your BI coverage, including whether different types of coverage (e.g. named perils vs. comprehensive, non-damage BI) may be more appropriate for renewal.
- Timing of when notice should be served and the ability to file at a subsequent date.
- The basis for determining the premiums on your commercial policy is based on economics. More specifically, that it is based on payouts compared to premiums and that reporting a possible claim for which there is no subsequent payout will not impact your future premiums.
Please do not hesitate to contact a member of SLF with any questions regarding the above, including the following who have extensive experience in BI insurance claims: