Results of Third Party Review of Business Interruption Insurance Coverage

May 8, 2020

Even as physical distancing measures appear to loosen, and clinics reopen, the unprecedented pandemic health situation our country faces continues to have a dramatic impact on business owners and physiotherapy professionals across our profession. We recognise the financial strain that government-ordered business closure has caused and the legitimate quest expressed by many of our members to ascertain whether other avenues will provide relief, including insurance placed through our General Insurance program placed with Novex Insurance.

In response to member requests we have engaged a major Canadian law firm who are experts in matters dealing with insurance policies and coverage, in order to obtain an independent view of any potential member entitlement under the Policies placed on your behalves.

In undertaking this review, counsel were given full access to all relevant facts and materials, and engaged in discussion with us and our broker.

Their considered advice is as follows:

1. Despite what one may read in the news, there were and are very few, if any, insurers in the market who provide coverage for business interruption brought on by government closure and/or pandemics. 

Secondly, negotiation of such policies that do provide some coverage are in any event limited and the exception and not the rule. If they exist, they are generally one-of-a kind special policies not offered to the general market.    

Counsel has expressed that the Policy we have is standard if not a superior offering providing a broad range of anticipated coverages offered in the market.

2. There is no coverage for COVID-19 related losses in our Policy.

While our Policy provides certain types of business interruption coverage and an extension of that coverage, such coverage is wholly dependent upon there being physical loss of or physical damage to your business premises. While the CPA advocated on behalf of members that the COVID-19 virus lockdown constituted “physical loss of or damage to business premises”, the more literal and legally defined wording of the Policy did not support such a view.  Counsel has noted that absent actual physical damage to your premises, even a government order causing you to close your business does not lead to any coverage where you are suffering a delay or loss of market or loss of use or occupancy of your premises. This is the most common form of damage being experienced by most professional business, and as our lawyers advise, there is no coverage.

We have, in consultation with our broker BMS Risk Services Ltd., continued discussion with our insurers, in recognition of our mutual business slowdown, to seek recognition from our insurers to ensure we are well-positioned as the insurance realities in the country continue to be impacted by the COVID-19 outbreak.  The result of these conversations, and the advocacy work done on behalf of the CPA by our brokers at BMS, resulted in no policy increases in the 2020/2021 renewal year, and led to the introduction of the CPA Member Relief Package 2020.

We thank the business community for their transparency with the CPA about the issues related to coverage, and for your patience as we sought independent legal counsel to ensure we were equipped to effectively manage the path forward with respect to business interruption insurance.

You can forward any questions about this review to information@physiotherapy.ca or any questions about your specific policy to our brokers at cpa.insurance@bmsgroup.com.