Policies After The Pandemic: COVID-19 Is Still Not Property Damage

• Published date: 22 February 2024
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Coronavirus (COVID-19), Insurance Laws and Products, Trials & Appeals & Compensation, Operational Impacts and Strategy
• Law Firm: Clark Wilson LLP
• Author: Mr Denny Chung and Emily Davies

The Ontario Court of Appeal affirmed in SIR Corp. v. Aviva, 2023 ONCA 778 that a commercial all-risks policy did not provide coverage for business interruption during the COVID-19 pandemic. Clark Wilson previously summarized the lower court's decision. Insurers should welcome SIR Corp as consistent with the law in Canada: property policies covering "direct physical loss or damage" generally require actual physical alteration to the property insured.

Trial Decision: No Physical Damage, No Coverage

SIR Corp made a business interruption claim under its all-risks property policy for the closure of its restaurants and loss of inventory during the pandemic. The policy provided coverage against "all risks of direct physical loss or damage" to insured property, "loss resulting from interruption or interference with the insured's business as a consequence of the property of the insured or others...