As we discussed here recently on the blog, business interruption (BI) has been a hot topic during the global pandemic. In the post we mentioned a court case in Britain that revolved around 21 different business interruption policy wordings from a variety of companies that offer commercial insurance coverage across the pond.

The verdict in the case has been passed and it could affect businesses here in Ontario.

The court ruling on business interruption in a nutshell

The specific court case in question dealt with businesses that did have insurance coverage for BI in the event of a notifiable disease within a specific radius of the business. While there were various wordings under consideration, in essence, the court ruled that with some of the wordings, business interruption coverage would indeed apply. In other instances, the courts did side with the insurers that BI coverage was not triggered. (Click to get more details about the ruling: Mixed result in British court ruling in business interruption coverage dispute – Canadian Underwriter).

This case was not looking at business insurance plans that required damage to physical premises in order to trigger BI.

How a court in Britain could impact businesses in Ontario

So why does any of this matter if we’re talking about courts in another country? Most Canadian courts operate under British Common Law and are guided by rulings in other common law countries (which would also include the US). This ruling in Britain establishes a precedent.  

Also, some of the insurers in the case offer coverage worldwide, including in Ontario. If the policy wordings are the same here, a lawyer in Toronto suggests that Canadian courts will take a similar stance to those in Britain and that inconsistency between the countries is unlikely (source: Canadian Underwriter).

So how will this affect your business?

In these unprecedented times, it’s easy to feel lost and confused. Businesses have taken a beating and many are struggling to make it through the pandemic, while others have had no choice but to close their doors for good.

As all businesses are different, so too are their insurance plans. With that said, whether or not business interruption coverage should apply will depend on each and every business’ circumstances and the specifics of their policy. There is no one size fits all blanket statement that can be made. It’s up to every business to determine the extent of their insurance coverage and how it applies in the current reality. Some businesses are getting outside help with this (see: Why restructuring firms are looking at their clients’ business interruption insurance – Canadian Underwriter).

Click here to get more details on this topic from Canadian Underwriter:

• How Canadian courts could be influenced by U.K. business interruption test case
• Will the U.K. decision in a test BI case matter to Canada? Intact and ratings agencies weigh in

Businesses have taken a battering, and it does not look like things will ease up anytime soon. Unfortunately, cases are on the rise again in Ontario and across the country and no one knows what the future holds.

If you’re concerned about your business insurance coverage, or would like to speak to an insurance specialist to understand the plan that you have in place, please do not hesitate to get in touch with us.

Image source: FreeDigitalPhotos.net | Stuart Miles