COVID-19 and Business Interruption Insurance Class Action

On January 27, 2020, Canada reported its first case of the novel coronavirus SARS-CoV-2 (“COVID-19”). By March of 2020, the number of COVID-19 cases was rapidly increasing every day. In response, civil authorities across Canada began taking steps to limit outbreaks of COVID-19, including the implementation of closure orders of various businesses. 

The effect of closure orders on independent, small businesses has been incredibly damaging. The Canadian Federation of Independent Businesses estimated that as of February 2021, the total debt taken on by Canadian small businesses as a result of COVID-19 was $135.1 billion. 40% of small businesses say that it will take at least a year to return to pre-COVID-19 profit levels. 

Many, if not all, Canadian businesses hold some form of business interruption insurance that provides coverage for losses suffered as a result of an insured event (or peril). One insurer in particular, Aviva Insurance Company of Canada (“Aviva”) sold policies to Canadian businesses, which included protection for the loss of business income as a result of an outbreak of a contagious or infectious disease. These protections are often included in a form titled “Business Income Actual Loss Sustained Form” and numbered 912000.

Canadian businesses small and large have applied to Aviva for contagious disease coverage and have been denied coverage by Aviva, which takes the position that many of its policies do not provide coverage for losses arising out of the COVID-19 pandemic. 

The law firms of Thomson Rogers, Lax O’Sullivan Lisus Gottlieb, and Miller Thomson have issued a Canada-wide class action proceeding claiming $500 million in damages on behalf of Canadian businesses who have been denied business interruption insurance coverage under their policies by Aviva during the COVID-19 pandemic.

A class action is a civil lawsuit where one (or a small number of) plaintiffs sue a defendant (or a number of defendants) on behalf of a large group of plaintiffs who have the same claims against the same group of defendants. This type of proceeding can save costs for all parties and help to conserve Court resources. In this instance, the class action has been brought on behalf of all policyholders with this coverage, which is estimated to include thousands of businesses.

Recently the Honourable Justice E. Belobaba of the Ontario Superior Court of Justice certified the class proceeding, meaning that this matter is appropriate to be dealt with as a class action.

It is quite possible that many business owners across Canada are unaware of potential claims they may have for business interruption insurance against Aviva. “Canadian businesses insured by Aviva should immediately review their policies to determine whether they include these significant coverages that are often referred to as Restrictive Access, Negative Publicity or Interruption by Civil Authority coverages,” say Robert Ben and Stephen Birman of Thomson Rogers.

Policyholders who have losses and have not submitted claims to Aviva should consider submitting a claim to Aviva, either directly or through their broker. 

Please contact one of the law firms handling the case (Thomson, Rogers, Lax O’Sullivan Lisus Gottlieb, or Miller Thomson) for more information about the class action. 

1. Canadian Federation of Independent Businesses, “Canada’s small businesses now collectively owe over $135 billion as a result of the pandemic”, (February 25, 2021)

CanadianSME team is not responsible or liable for the content in the article, this article is being sponsored by Thomson Rogers