Global insurer Aviva is facing a class action lawsuit in Canada as a number of hotel groups look to enforce insurance policies covering business interruption or loss of income.
Several hotel chains are affected, including Best Western, Home 2 by Hilton and Hampton Inn.
This action applies to all hotels who were insured under the commercial insurance policy issued by Aviva pursuant to the Hotel Program.
The action alleges that Aviva is in breach of contract when it denied the hotels’ loss of business income coverage after the Federal and provincial governments declared states of emergency, restricting their business, due to the outbreak of COVID-19.
The proposed action claims for payment of loss of business income damages to those hotels with the Aviva policy.
A spokesperson for Aviva said it understood that the hospitality industry has been “severely impacted” by the COVID-19 pandemic.
“Unfortunately in this instance there is no coverage for provincial-wide shutdown orders as a result of a worldwide pandemic,” the spokesperson told news site Canada.com, adding that she could not comment further because “this matter is in litigation.”
In a statement of claim submitted to the Ontario Superior Court of Justice, Aviva are said to have denied coverage to the plaintiff, despite the fact that the plaintiff is covered for this type of loss.
On May 22, 2020, Aviva sent a letter to the plaintiff setting out the basis of its denial of coverage. In a follow up letter on June 8, 2020, Aviva further outlined the basis of its denial of coverage.
Aviva is interpreting the coverage to apply only to outbreaks that occurred “at or within the applicable area of the insured premises”.
Aviva further stated that “there is no coverage under the policy for business income losses resulting from the Closure Orders made in response to the current worldwide COVID-19 pandemic.”