A Regina law firm has launched a national class action against indemnity insurers in Canada who are not paying business owners for losses accumulated as a result of the COVID-19 pandemic.
Tony Merchant, lead counsel for Merchant Law Group, says the action names the 10 largest insurance providers in Saskatchewan and Canada, including Desjardins Financial Security Life Insurance Company and Co-Operators General Insurance Company.
The class action has few plaintiffs on Friday, but Merchant says he hopes the affected companies will come forward and join the trial. He says he cannot yet provide figures on the number of companies involved in the class action.
“Insurance companies are trying to get out of the payment because it is unplanned. It is a pandemic. It is so terrible. [But] the reality is that they had to know that this kind of thing was going to happen because it has already happened, “said Merchant.
“SARS has had a significant impact on businesses in Canada. We are now back with a similar problem.”
The merchant said insurance companies claim the pandemic is a “force majeure” – a legal term referring to unforeseeable circumstances that excuse a party from fulfilling a contract.
“We think we will succeed. We don’t think insurance companies can pretend [that] it was unexpected. Pandemics are not unforeseen. “
The merchant cites examples of past MERS and bird flu epidemics.
In terms of insurance coverage, a war could be a more common example of force majeure, he said.
But if [insurance companies] will not pay for a business disruption and these kinds of circumstances make it hard to imagine when they will pay. “
“I hope we succeed”
According to Merchant, one of the plaintiffs in the class action, Memories Dining and Bar in Regina, relied on the fact that it would be compensated if the business were to close for reasons beyond its control.
Thomas Siarkos, owner of Memories Dining and Bar, says he pays for the insurance premiums of Smith Insurance, which provides coverage through Wynward Insurance Group, one of the defendants named in the class action.
“We had insurance covering all aspects, such as fire loss and business interruption, which was crucial for us,” said Siarkos.
“To our dismay and disappointment, we found out by contacting them … interruption insurance is not part of this category. And we are just [thinking] if there is an interruption… it would be this interruption. “
Siarkos says Memories has lost at least $ 100,000 due to reservation and event cancellations in the past three weeks. The restaurant is completely closed and all staff have been dismissed. Siarkos still has to pay the rent and other fixed costs for the restaurant, even without cash.
“I am sure that if this business is successful, and we have every reason to believe that it will be, then many other businesses will benefit from it. And, fundamentally, we are doing it for the community at large. ” “
The CBC asked the Wynward Insurance Group for comments.
According to the class action complaint statement, business disruptions were caused directly or indirectly by the COVID-19 pandemic.
This includes loss of revenue due to the reduction or elimination of customers due to public health orders restricting business operations and public gatherings.
“For those concerned, I would like to see the insurance industry shrink and be responsible,” said Merchant.
“It will be a multi-billion dollar action … even tens of billions of dollars because the losses are phenomenally high,” he said.
“Interruption of activities is very expensive [insurance] industry.”