TORONTO -- Canadian hotels are the latest group to launch a class action lawsuit resulting from COVID-19 after they were denied insurance coverage for business income lost because of the pandemic.
In a statement of claim, Lerners LLP alleged that Aviva Insurance Company of Canada was 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 novel coronavirus.
It is seeking $150,000,000 including loss of business income and the accountants' fees. Each hotel has up to $500,000 of coverage.
"We are still quantifying the specific loss for the representative plaintiff and putative class members, but the losses are expected to be significant," said a Lerners spokeswoman.
The claim said hotels paid premiums for loss of business income insurance with the expectation that Aviva would act in good faith.
However, the insurance company notified hotel customers that the coverage applies only to outbreaks that occurred "at or within the applicable area of the insured premises".
"We know these are challenging times for everyone. And like many, the hospitality industry has been severely impacted by the COVID-19 pandemic," Aviva said in a statement.
"Unfortunately in this instance there is no coverage for provincial wide shutdown orders as a result of a worldwide pandemic. As this matter is in litigation, it wouldn't be appropriate for us to comment further."
The lawsuit was filed on behalf of Roshan Holdings Inc., which owns and operates two hotels, a Home 2 by Hilton located in Milton, Ont., and a Hampton Inn located in Peterborough, Ont.
The Ontario government declared a provincial state of emergency on March 17 to help contain the spread of the pandemic. Other provinces ordered the mandatory closure of all places of non-essential business.
"Although the hotels were not completely closed, their operations were significantly restricted," said the claim. "The hotels could not offer food and beverage service, and all of the amenities including the pool and gym were mandated to close under the Closure Orders due to COVID-19."
No one rented rooms as Canadians were told to stay home and international borders were closed to tourists.
The class action, which could involve hundreds of hotels, needs to be approved by a judge.
Multiple class action lawsuits have been filed in Canada against insurance companies, airlines, a meat-packaging company, retirement homes, Correctional Service Canada and others resulting from COVID-19