Recently, the Ontario Superior Court released its decision in Workman Optometry Professional Corporation v. Certas Home and Auto Insurance Company, 2023 ONSC 3356 (“Workman Optometry”). Workman Optometry is a national class action comprised of businesses alleged to have suffered business interruption losses due to COVID-19. The class action initially named 16 insurers as defendants.

The court determined that the presence of COVID-19 or an order of a civil authority that was made due to COVID-19 does not constitute physical loss within the meaning of the business interruption provisions of each defendant’s property insurance policy.

Of significance was the wording of the policies being considered: much of the decision turned on the specific language referring to “physical loss or damage to property”. The court explained that insurance policies must be read in their plain meaning and in the context of the insurance agreement. It was determined that the common understanding of the policy wording did not include viruses, rather it was in contemplation of damage that would, “alter the appearance, shape, colour, structure, or other material dimension of the property”.

This decision followed the precedent set by other cases decided in Canada and the United States that dealt with insurance claims following the advent of the COVID-19 Pandemic. In Workman Optometry, each plaintiff shared the common characteristic of relying on personal customer/client traffic in and out of their premises to generate sales of goods and services. The arrival of the pandemic and the subsequent global response affected the profits of the plaintiffs, and they sought coverage through their respective “all-risk” insurance policies for physical loss or damage to property.  However, the court did not agree that the losses incurred were the result of physical loss or damage to property. Penny, J. distinguished that viruses affect people, not inanimate surfaces [property]. It was also noted that the danger of COVID-19 is to people in close proximity to one another, not to the real property itself. The property at each business premises was never damaged in a physical sense. As such, the claim for physical damage or loss did not apply. Similarly, the plaintiffs’ secondary claim for loss of use of their property was not successful because the insurance policies were not in place to protect against loss of use, only physical loss or damage to property. Lastly, the claim regarding potential exclusions of the defendants’ property insurance that would result in coverage for such loss or damage was not addressed in the decision because it was only relevant if the judge had ruled in favour of the plaintiffs’ claim.

In sum, based on the wording of the policies, it was determined that the presence or threatened presence of COVID-19 does not fit the definition of physical loss or damage to the plaintiffs’ property. The entire reasons for the decision can be found here.