COVID-19 – UPDATE – Business Interruption Insurance – Am I Insured?

In a previous article, we discussed why most business interruption policies will not cover business interruption losses caused by COVID-19.  Since then, however, the Ontario Superior Court of Justice (the "Court") rendered a decision that may improve the possibility of coverage for such losses.

Our original analysis was based on cases in which Canadian courts interpreted the term "physical damage" to mean tangible physical damage to the insured property (e.g. fire damage). However, in MDS Inc. v Factory Mutual Insurance Company, the Court concluded that "physical damage" includes impairment of function or use of the insured property. In short, the Court concluded that coverage extended to a loss of use of the property, notwithstanding the absence of tangible damage.