Business interruption insurance policies usually contemplate the loss of premises by physical damage. Typically, the Covid 19 pandemic does not physically damage premises, however, the loss of uses of premises is arguably “physical damage”. In a decision released 30 March 2020 the Ontario Supreme Court in MDS Inc & anor v Factory Mutual Insurance Company, 2020 ONSC 1924 decided that loss of use or function of premises could be “physical damage” for the purposes of the insurance policy. To interpret “physical damage” as requiring tangible damage was inconsistent with the purpose of the insurance policy. The case involves the pre-emptive shut down of a nuclear reactor with a heavy water leak that produced isotopes that were then sold by MDS. It claimed lost profit of about $121M by reason of the regulator imposed shutdown of the premises for 15 months. This decision will be helpful to insureds in bringing successful claims for losses as result of Covid 19 enforced closures and losses.
In its first substantive judgment in Houston v Southern Response Earthquake Services CEI-OOXX-2019 the Canterbury Earthquakes Insurance Tribunal has shown that it will be a waste of time and money for homeowners. The decision by the chairperson of the tribunal, a former family court judge, CP Somerville, fails to follow an applicable Court of Appeal case about the policy standard of remediation and does not decide any super-structure repair scope or whether the insurer strategy complies with the Building code. Mr Somerville surprisingly approves a jack/pack repair for a house with a heavy roof and heavy cladding on TC3 land adjacent to a stream with a floor level differential of 72mm as being “as new”. Mr Somerville refused to get involved in deciding technical engineering issues and building code compliance. These are the issues in most earthquake disputes. Hopefully the judgment is successfully appealed.