Lerners Represents Successful Defendant in COVID-19 Insurance Class Action
Congratulations to the counsel team of Kirk Boggs, Jason Squire and Michael Dunk on their successful defence of a class action on behalf of their client arising from business interruption policy claims related to the COVID-19 pandemic in Workman Optometry Professional Corporation v Certas Home and Auto Insurance Company.
The plaintiffs were businesses that were shutdown or suffered impairment of their operations during the pandemic. They brought a class action against their insurers, claiming that their business interruption insurance policies covered the resulting economic losses. The key language in the policies required that an insured suffer “physical loss or damage to property” for there to be coverage. The parties agreed on three issues for determination during the common issues trial: (1) Whether the presence of the SARS CoV-2 virus or its variants could cause physical loss or damage to property within the meaning of the policies; (2) Whether an order of a civil authority that limited business activities due to the SARS CoV-2 virus or its variants could cause physical loss or damage within the meaning of the policies; and (3) If the answer to either of the first two questions was yes, whether any exclusions in the policies precluded coverage.
After a trial heard over a period of five weeks, which included expert evidence regarding the nature of the SARS CoV-2 virus, how it is transmitted and how it interacts with physical surfaces, as well as evidence relating to the history and purpose of related government orders, Justice Penny determined that neither the SARS CoV-2 virus or orders of civil authority could cause “physical loss or damage to property” within the meaning of the policies. As the answer to the first two questions was “no,” Justice Penny did not find it necessary to answer the third issue. The claims against the insurers were dismissed.
While courts in other jurisdictions have grappled with the application of insurance contract interpretation principles to COVID-19 pandemic-related claims, this is the first Canadian decision to do so at trial with the testimony of experts. As a result, it is an important decision for the insurance industry.
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