Canmore company files $180M class-action suit against Lloyd's for refusing pandemic-related coverage

A Canmore vacation rental business is suing its insurance company for "wrongfully refusing" coverage for pandemic-related losses as part of a proposed $180-million, class-action lawsuit.

The representative plaintiff, Wataga Properties, a property management firm with a head office in Calgary, 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 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.

'Peace of mind'

The policy "was intended to provide peace of mind to property owners," the claim argues. 

COVID-19 and the resulting orders closing borders, businesses and restricting travel, have significantly impacted Wagata'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 payout of its rental income coverage but says 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.

Claim doesn't fall under 'direct physical loss or damage,' says Lloyd's

In July, Wataga received correspondence from Lloyd's advising the company's claim "must arise out of an order of civil authority which prohibits access to the insured property due to direct physical loss or damage."

But Wataga's lawyer argues 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 Farrell.

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," reads the lawsuit.

The suit must still be certified as a class action and Wataga must be approved as representative plaintiff.