Lawsuit of the week: City of Prince George sues insurance company over denial of pandemic-related business interruption coverage – Business in Vancouver

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The City of Prince George is suing the Royal & Sun Alliance Insurance Company of Canada, claiming the insurance company wrongfully denied business interruption coverage for devastating revenue losses caused by the COVID-19 pandemic.
In a notice of civil claim filed on June 15 in BC Supreme Court, the City of Prince George lays out a timeline for how the virus began to spread widely and rapidly around the world in late 2019. The first case in B.C. was recorded on Jan. 28, 2020, the city claims, and by March 2020 the virus had spread “exponentially” throughout British Columbia, threatening to “overwhelm the health-care system causing massive loss of life, unless drastic measures were taken to stop its spread.”
The mere possibility that the virus was present or near a property rendered it “unsafe and unfit for use,” the city claims. At the time, governments and members of the public were forced to assume that virtually nowhere was safe from the virus, the lawsuit says.
 “In other words, every place of business or municipal operations had to be treated as a site where the virus was present,” the city’s lawsuit states.
With that in mind, government orders for pandemic control measures for Prince George and its “contingent businesses” interrupted operations. Closures of city facilities caused the city “significant losses,” the lawsuit says.
According to the claim, the city was forced to close several municipal facilities including the CN Centre, the Rolling Mix Concrete Arena, and the Elkensentre and Kin Centre, along with the Prince George Aquatic Centre and Four Seasons Leisure Pool. In addition, the city closed the Prince George Conference and Civic Centre to comply with provincial government public health mandates. Moreover, in March 2020, the Treasure Cove Casino closed and didn’t reopen until months later and not at full capacity.
 “Prince George suffered a significant loss of revenue from the closure and then limited operations of the civic facilities,” the claim states. “Prince George receives a percentage of the net gaming income from casinos, including Treasure Cove, for hosting the casino in the City.”
When BC Transit implemented a “no fare” model when ridership dropped during the pandemic, the city’s revenue also took a hit, according to the claim. The city’s policy with Royal & Sun allegedly didn’t require “physical damage” to property to entitle it to coverage, but rather damages like business interruption “caused by order of civil authority to retard or prevent a conflagration or other catastrophe.”
The insurance policy, the city claims, was meant to provide “peace of mind” against all risks, including viruses as “insured perils.”
 “The insured perils include known and unknown risks, including substances such as viral agents that render areas unusable,” the claim states. “There is no specific exclusion in the Policy for the peril or risk of viral pathogens, contagious disease or a pandemic.”
In August 2020, Royal & Sun denied the city’s insurance claim on the bases that there hadn’t been “physical loss or damage” to property to justify business interruption coverage and that the government orders or “civil authority” provision didn’t apply because the orders weren’t made “because of actual or threatened physical loss or damage.” 
The City of Prince George seeks a declaration that Royal & Sun must pay out under the insurance policy and unspecified damages for breach of contract. The allegations have not been tested or proven in court, and Royal & Sun had not responded to the lawsuit by press time.

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