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City of Prince George suing insurer over refusal to cover COVID losses

Viruses an "insured peril," City contends in notice of claim
COVID mutation

The City of Prince George has taken an insurer to court over a refusal to cover losses related to the COVID-19 pandemic.

In a notice of claim filed June 15 in B.C. Supreme Court in Vancouver, the city contends Royal and Sun Alliance Insurance Company breached its contract by denying coverage, despite providing business interruption coverage.

The city is seeking indemnification related to losses brought on by the closure of civic facilities, reduced bus services and a move to a "no fare" model by B.C. Transit, and closure of Treasure Cove Casino, from which the city receives a share of the revenue it generates.

According to the lawsuit, in August 2020, RSA denied coverage on the grounds that there had been no physical loss or damage to trigger the the coverage and because government orders were not made for that reason but rather to limit the spread of the disease.

But the city contends the policy covers losses caused by order of civil authority to prevent a "conflagration or other catastrophe."

"There is no requirement for any physical damage in order for this general coverage provision to apply," the city says in the lawsuit, adding it "suffered business interruption losses as a result of the government measures the orders of civil authorities."

The city also asserts that "viruses are insured perils" and that there is no specific exclusion for "viral agents that render areas unusable."

"The Virus caused physical changes to the air, surfaces and interior spaces of the Civic Facilities, casinos, BC TransLink vehicles, and other insured properties and rendered such properties physically unusable for their intended purpose," the city says.

No dollar figure was provided for the amount of indemnity the city is seeking.

RSA has not yet filed a response and the claims have not been tested in court.