Aviva insurance faces class action lawsuit from hotels denied COVID coverage

By Ross Marowits

THE CANADIAN PRESS

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.

 

Mortgage defaults after COVID 19 could look different than 2008, says economist

TORONTO _ A Bank of Canada economist says the current economic recovery could be different than the recovery from the financial crisis of 2008.

Bank of Canada Director of Financial Stability Mikael Khan said that while the employment rate has fallen due to the pandemic, house prices are recovering and keeping homeowners from filing for insolvency.

Khan said breaks from mortgage payments have bought home owners some time to get back to work amid the COVID-19 pandemic and economic downturn.

“The fact that these deferrals have been available is really, really important,” said Khan.  “Ultimately what matters most when it comes to defaults is people having a job, having their incomes. What the deferrals are doing is they’re essentially buying time for that process to unfold.”

Khan, who spoke at the Move Smartly Toronto Real Estate Summit on Monday, has been studying mortgage defaults. He compared the COVID-19 pandemic to a natural disaster, such as the 2016 wildfires in Fort McMurray, Alta., which also involved a mortgage deferral recovery plan.

Bank of Canada research found that while the wildfires caused a bigger spike in employment insurance filings than the 2008 recession, the EI trend reversed much faster after the fires than in 2008.

The 2008 conditions set off a lengthy recession due to “an underlying fragility in the global financial system,” the research suggested. But the wildfires, like the COVID-19 pandemic, were a sudden shock.

“One thing that’s always very important when you’re facing a large negative shock is the initial conditions,” said Khan.

“In Fort McMurray, when the wildfires hit, that’s an area that had already been struggling for some time with the decline in oil prices that had occurred about a year or so prior, so financial stress was quite high . . . Now, at the national level, what we’ve been concerned about for many, many years is the high level of household debt. That’s the number one pre-existing condition that was there when the pandemic struck.”

While there are some parallels, the rebuilding process from a pandemic remains more uncertain compared to a wildfire, the research said. Khan cited increased savings rates as an example of a fundamental shift with potential to affect how quickly the economy recovers from COVID-19.

Over the past few months, some have warned that it could lead to a deferral cliff once benefits such as Canada Emergency Response Benefit and mortgage deferrals _ run out.

“When it comes to bumpiness in the recovery . . . . this question that has been in the background of most of our discussions is, `To what extent will we see defaults or insolvencies?”’ said Khan. “I think it’s reasonable to expect some sort of increase. What we’d be concerned about, there, is a very large-scale increase.”

Khan said that when a mortgage is in default, it can be caused by a  “dual trigger” of both unemployment and a large decline in house prices. Home prices in many areas have recovered since the start of the pandemic, Khan said. The job market’s recovery will be key to determining the impact of mortgage deferrals, said Bank of Canada research cited by Khan.

Softening population growth from immigration could start to weaken house prices in the future. But for now, Khan said, it wouldn’t make sense for homeowners with healthy home equity to file for insolvency.

“Even in cases where a homeowner simply can’t make their mortgage payments anymore  as long as they have equity in their homes and the housing market is relatively stable _ there’s always the option to simply sell without kind of resorting to those sorts of measures,” said Khan.

CRT Assesses Damages for “Relatively Minor” Injury at Only $1,500

The guest post is written by ERIK MAGRAKEN

Reasons for judgement were published this week by BC’s Civil Resolution Tribunal (“CRT”) addressing fault and damages following a collision.  In what is one of the lowest assessments of non-pecuniary damages I have seen the CRT awarded $1,500 for injuries which lasted several months.

In today’s case (Thandi v. Uggal) the Applicant was involved in a 2019 collision.  The Respondent denied fault but was found liable for the crash.

The Applicant, who was self represented, gave evidence that he suffered various soft tissue injuries.  These required 3 physiotherapy sessions and two doctors visits.  The Applicant did not bring medico-legal evidence in support of his claim.

Tribunal Member Kristin Gardner accepted he was injured but awarded non-pecuniary damages at only $1,500.  In doing so the Member cited a BC Provincial Court authority from 14 years ago, took the lowest end of the suggested range of applicable damages and did not adjust it for inflation.  In reaching this assessment the following reasons were given:

35.   Mr. Thandi submits that he suffered injuries to his neck, shoulder and upper back as a result of the accident.

36.   Mr. Thandi claims $5,500 for pain and suffering. This figure is the applicable cap for a “minor injury” as defined in the Insurance (Vehicle) Act (IVA). The parties did not expressly agree whether Mr. Thandi’s injuries are “minor injuries” as defined in section 101 of the IVA. However, given Mr. Thandi’s claim does not exceed the applicable “minor injury cap”, I find that I do not need to determine whether the injuries are in fact “minor injuries”.

37.   Mr. Thandi says that due to the Covid-19 pandemic he was unable to obtain his doctor’s records to support his claim. However, I note that Mr. Thandi did not request an extension of these CRT proceedings so that he could obtain this evidence. It is undisputed that Mr. Thandi attended 3 physiotherapy treatments and 2 visits to his doctor, with his last treatment in November 2019. Mr. Uggal submits that there is insufficient documentation to properly evaluate Mr. Thandi’s claim for pain and suffering. However, Mr. Uggal does not dispute that Mr. Thandi sustained injuries from the accident.

38.   In Holt v. Hertzberg, 2006 BCPC 228 at paragraph 27, the court noted after reviewing the authorities, that non-pecuniary damages for relatively minor soft tissue injuries that resolve within a matter of months are often assessed in the range of $1,500 to $7,500, depending on the facts of the case. Given the limited evidence about Mr. Thandi’s injuries, on a judgment basis, I find that $1,500 is appropriate compensation for non-pecuniary (pain and suffering) damages.

minor soft tissue injury, Thandi v. Uggal, Tribunal Member Kristin Gardner

 

#DriveSmartBC – Stay Between the Lines

 

Traffic IslandOne sure sign of growing up when we were young was the ability to use our crayons and colour between the lines. An important skill for a “grown-up” driver is also the ability to stay between the lines. Judging by the e-mails that I continually receive from readers who state that this is their main pet peeve, there is a sizable number of drivers out there who need to do a bit more skill improvement.

Staying centered in your lane is not difficult. Here’s a beginner’s tip from the Tuning Up Guide:

The first thing you may notice as you begin driving in moderate traffic is that you have to stay in the centre of your lane. To start with, this is no easy task. The magic rule: look the way you want to go. If you keep looking 12 seconds ahead down the centre of the lane, your peripheral vision will help you centre yourself.

If you haven’t been on the inside of a curve lately and met an oncoming driver part way over the center line into your lane, a quick look at the lines painted on the road will tell you that many tires have passed over the paint and worn it away.

It shouldn’t matter if you cross over the lines when no one is coming should it? Well, it’s both illegal in that situation and will end up in a collision the first time you fail to see the oncoming vehicle. It will be really interesting if that driver is doing the same thing!

Perhaps more common still is the encroachment onto the shoulder when drivers go around a corner. This territory is the domain of pedestrians and cyclists, your vehicle does not belong there. It’s hardly likely that you would be injured or killed in a collision here but the same cannot be said for the unprotected shoulder users.

Should vehicles have to become smarter than their drivers? Your next new vehicle may have lane keeping assist to help you stay where you are supposed to be.

One side effect of this safety feature will be enforcement of signalling lane changes. If you fail to signal your lane change, the system will see this as a drift to one side and will take action to alert you.

Here in Canada, winter snow hides the lines on the road. Unless it is unsafe to do, your guide is the tire tracks left by the vehicles that have already been driven there.

So, show a little pride in your ability to be a mature, skillful driver. Keep your vehicle inside that 3.6 meter wide space between the lines. This will also show your respect for other road users and help to keep them safe. If you cannot, it’s time to put your crayons back in the box and let someone else do the driving.

References:

Cst. Tim Schewe (Ret.) runs DriveSmartBC, a community web site about traffic safety in British Columbia. For 25 years he was an officer with the Royal Canadian Mounted Police, including five years on general duty, 20 in traffic and 10 as a collision analyst responsible for conducting technical investigations of collisions. He retired from policing in 2006 but continues to be active in traffic safety through the DriveSmartBC web site, teaching seminars and contributing content to newspapers and web sites.

www.drivesmartbc.ca

A more controlled method of managing events when claims outstrip available funds to cover them JOHN NEAL, CEO, LLOYD’S OF LONDON

Read more
Why don’t we have pay-per-mile auto insurance in Canada?

Why don’t we have pay-per-mile auto insurance in Canada?

The excerpted article was written by THE GLOBE AND MAIL

 I see ads on American TV for pay-per-mile insurance, where you just pay for how much you drive. The ads sound great; it really makes sense, especially now. Is that really how it works? Do any Canadian companies offer this? If not, why? – Rajinder, Ottawa

In Canada, we don’t have the option to buy insurance by the mile – or in our case, by the kilometre. The technology is already used here, but the rules in most provinces don’t allow it. “The regulations in the United States allow for companies to price per mile,” says Ryan Stein, executive director of auto-insurance policy and innovation at the Insurance Bureau of Canada (IBC). “In Canada, our regulators decided they want to take a more cautious approach.”

Pay-per-mile insurance uses a telematics device that’s attached to your car and sends information to the insurance company – including mileage, when you drive, speed and how hard you brake.

Pure pay-per-mile insurance, offered by two U.S. companies, charges you a base monthly rate and then, on top of that, charges you for the actual distance you drive.

“There’s a monthly base rate,” Stein says. “So if you’re paying $200 a month now, your base rate would be a fraction of that.” For instance, on the website for Metromile, a U.S. company that only offers pay-per-mile insurance, a fictional 40-year-old male driving a 2015 Honda Fit in Seattle would pay a base rate of US$53 a month. Then there would be charges of 6.7 US cents per mile up to 250 miles (402 km) per day. So, driving 50 miles (80 km) a month would raise the total bill to US$56. At 200 miles (322 km), it would be US$67.

TELEMATICS FOR DISCOUNTS ONLY

Since 2012, several Canadian insurance companies have offered telematics, but, in most provinces, they can only use them to give you a discount – not to set your rates. “You get priced as you always would, but you’ll get a discount if you drive safely,” Stein says.

Stein says provincial insurance regulators in Ontario, Alberta, Nova Scotia and Newfoundland should change the rules to allow pay-per-mile insurance. That means they can’t use telematics data to add to your bill.

“I don’t believe there are rules against it in Quebec or New Brunswick, but most of the insurance companies are national,” Stein says. “If it were allowed in more of the major markets, that could have implications for the rest of the country.” Pay-per-mile insurance “isn’t for everybody,” because higher-mileage drivers wouldn’t save anything – but it would make sense for people who don’t drive often, Stein says.

“Look at what happened during the pandemic – people went from commuting every day to barely driving,” Stein says. “If you had pay-per-mile insurance, your premium would just automatically be lower without you having to let your insurance company know.”

PAY AS YOU GO?

In Ontario, CAA Insurance has been offering MyPace, a pay-as-you-go plan, since 2018. It’s not exactly pay-per-mile, but it lets you pay a base rate, and then pay a fixed amount for every 1,000 kilometres you drive.

The company calculates your premium the same way it normally would – based on your car, driving record, age, gender, annual mileage and where you live – but breaks it into 1000-km segments. For instance, if you normally pay $1,100 per year, you would pay an annual base rate of $200 and then $100 for every 1,000 km, CAA says. You get notices as you get closer to the 1,000 km threshold. Once you’re over, you automatically buy the next 1,000 km. “If you only drive 5,000 km in a year, you’ll save 30 per cent,” says Matthew Turack, president of CAA Insurance. Turack recommends the plan for people who drive less than 9,000 km a year. If you drive more than than that, you will pay a surcharge – CAA says it’s about $8 or less – for every additional 1,000 km.

“This fee will put you above the price of our traditional auto insurance policy,” CAA’s website says.

Turack says rules aren’t the reason CAA Insurance chose pay-as-you-go instead of pay-per-mile. “We’ve never had any resistance from the regulator,” Turack says. “CAA Insurance didn’t go to billing for individual kilometres because of feedback we saw in the States, where consumers were surprised at their bills at the end of the month.”

READ MORE HERE:

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest