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.

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Business interruption insurance claim denied during COVID-19

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.