Loss of revenue due to COVID-19

More than twenty student cooperatives are suing their insurance company, Les Coacteurs, which refuses to compensate them for the financial losses caused by their closure in March 2020, which the Quebec government ordered at the start of the pandemic.

Nathalie Morissette

They claim that their policy includes protection against loss of income linked in particular to the cessation of activities declared “by the civil authorities” or after an “epidemic of infectious disease”.

These student cooperatives, which sell books, computers and other school supplies, are not the only ones leading this fight. Many companies insured for “operating losses” have also tried to be compensated by their insurer, but in vain, asserts Yasmine Genetti, vice-president of national affairs for the Canadian Federation of Independent Business (CFIB).

Thus, in the lawsuit filed before the Supreme Court on March 29, 2022, he claimed 26 student cooperatives, including those of the University of Quebec in Montreal, HEC Montreal, the Collège de Rimouski and the Cégep de Saint-Jean-sur- Richelieu for their insurance company. In total, more than 1.5 million dollars of losses suffered due to the cessation of their activities.


HEC Montreal student cooperative

Since May 2020, they alternately send, depending on the expiry date of their policy, a “Notice of Claim for Financial Losses Suffered Due to Circumstances Related to the COVID-19 Pandemic, all in accordance with police terms,” the lawsuit reads. It should be noted that the document provides for “various protections against the real loss of income which may result in particular from the prohibition of access to secure premises by order of the civil authorities, or even from the cessation of commercial activities following the spread of a ‘contagious disease or contagious disease which must be declared’.

However, the participants answered them in the negative. The insurance company does not intend to compensate them. It acknowledges that “COVID-19 is a contagious or contagious disease that can be reported”.

However, in explaining her decision, she “affirms that to her knowledge, there have been no cases of COVID-19 in or near the insured buildings of the plaintiffs”. Accordingly, there has been no full or partial disruption to business operations due to a localized case of COVID-19. In summary, the defendant submits that the cessation of the plaintiffs’ activities resulted from the taking of general measures for the purpose of combating the epidemic and not from an isolated case of COVID-19 in [les] The lawsuit says.

There was accurate coverage. We are absolutely convinced that we are right to continue.

MAnd Dominique Gilbert and Mr.And Julian Dubois, lawyers representing cooperatives

Our business partners declined to comment further on this, “because this is an ongoing lawsuit,” we were told by email.

Several complaints

Although he was unable to comment on the lawsuit against the student cooperatives, Yasmine Genetti of the CFIB, which notably represents companies in the retail sector, says that several members benefiting from protection against business interruption “tried to compensate them through their insurance company at the start of the outbreak.

There are many companies who thought that this clause would allow them to obtain compensation. But they did not succeed. Epidemics are not covered by these contracts.

Jasmine Janet, Vice President of National Affairs, Canadian Federation of Independent Business

“Usually, when we talk about property and casualty insurance, the business interruption coverage generally concerns property damage,” explains Pierre Babinski, director of communications for the Insurance Bureau of Canada. He cites in particular the case of a fire which would prevent the company from continuing its activities.

“It is possible that some insurance policies will have wording that covers government orders, but what we usually see more are the clauses that are really about business interruption due to physical damage, he insists. Most commercial insurance policies are not specific enough to mention government orders.

Two years into the pandemic, Mr. Babinski was unable to determine whether some insurance companies now offer coverage for businesses related to illnesses such as COVID-19.