Canada:Lloyd's sued for $180m for COVID-19 related breach of policy

A vacation rental business in Canmore, Canada is suing Lloyd's for "wrongfully refusing" coverage for pandemic-related losses as part of a proposed $180m class-action lawsuit.

The business, Wataga Properties (Wataga), claims Lloyd's Underwriters is in breach of the policy.

"These businesses purchased insurance to provide coverage from unforeseen circumstances just like the COVID-19 pandemic. They should be able to rely on this insurance when a disaster strikes," said lawyer Mathew Farrell. The policy "was intended to provide peace of mind to property owners," the claim stated. 

COVID-19 and the resulting orders closing borders, businesses and restricting travel, have significantly impacted Wataga's rental business, particularly between March and May, according to the court document. Wataga, which has five properties in and around Canmore, has asked for pay-out of its rental income coverage but said that Lloyd's has refused.\

The business was insured under Lloyd's "all risks" commercial insurance policy, which provided coverage for business interruption loss or loss of rental income. The claim argues the insurance policy contains nothing which excludes coverage for pandemic-related losses. However, Lloyd’s sent Wataga a notice in July, stating that the company’s claims “must arise out of an order of civil authority which prohibits access to the insured property due to direct physical loss or damage."

Wataga’s lawyer argued that the pandemic is physical because of the virus's ability to spread in physical ways. "Just because you can't see it doesn't make it less real or less physical," said Mr Farrell. The lawsuit stated that Wataga and other potential class members understood Lloyd's would protect them from lost rental income "due to fortuitous or unforeseen events that were beyond their control".

The suit must still be certified as a class action and Wataga must be approved as representative plaintiff. The statement of claim was filed at the Calgary Courts Centre. A statement of defence has not yet been filed. None of the allegations have been proven in court.

The Guardian Law Group says Wataga is thus far the only company involved in the suit but expects other businesses to come forward.

Source: Asia Insurance Review