Insurance Lawyer on Business Interruption Payout for COVID-19 – Toronto Star

Tsunami of insurance claims coming

Insurance lawyer Sivan Tumarkin, co-founding partner at Samfiru Tumarkin LLP, was interviewed by the Toronto Star for an investigation into business interruption insurance claims during the coronavirus (COVID-19) pandemic.

Tumarkin told reporter Rosa Saba that insurance companies are likely to face a “tsunami of claims” from Canadian businesses seeking financial support during the economic downturn brought on by the virus.

Why exclusions in a policy are important

After the 2003 SARS outbreak, Tumarkin noted that insurance companies did begin offering policies that cover crisis involving a pandemic or “infectious disease.” Unfortunately, some some insurance companies are suggesting to their clients that for a company’s policy claim to be valid, COVID-19 must be shown to have been geographically close to the business.

Tumarkin told the Toronto Star that business interruption insurance policies “better have a specific exclusion” for COVID-19 in order to defend their claim denial, otherwise they should be expected to pay out the policy to affected businesses.

What lies ahead for business interruption lawsuits

Tumarkin said that insurance companies are fighting hard to avoid making payments during the pandemic.

“They see a tsunami of (insurance) claims coming. They’re also afraid that the government will potentially step in and regulate them in a way for the future that they’re not going to like.”

Expect more business interruption lawsuits. Class-action lawsuits will also become more common in Canada and across the world, which insurance companies will likely settle outside of court to minimize costs and avoid a PR nightmare.

More businesses will likely apply for more comprehensive interruption insurance in order to safeguard against future pandemics and catastrophes.