Canadian Lawyer

June 2020

The most widely read magazine for Canadian lawyers

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Page 44 of 51 43 Company (FM Global), 2020 ONSC 1924, a radioactive leak forced a shutdown at the Nuclear Research Universal Reactor in Chalk River, Ont., which sold isotopes to MDS Inc. MDS had an "all-risks insurance policy" with FM Global, and it sued the insurer for lost profits. FM Global argued that "resulting physical damage" should be defined narrowly and require "actual physical damage," while MDS argued that the definition should encompass "loss of use." Justice Janet Wilson decided on the broader definition, "to include impairment of function or use of tangible property," write Samac and Haté. Apart from whether a pandemic-induced business stoppage applies as a physical loss, there is another complication with busi- ness interruption insurance, says Knutsen. Interruption means a complete halt. Having clientele radically reduced and income slowed to a dribble doesn't cut it in most policies, he says. "I can see business interruption claims qualify because it lacks the tangible property damage a fire or flood would leave behind, Knutsen says. In April, the Insurance Bureau of Canada stated that "most commercial insurance poli- cies and traditional business interruption policies do not offer coverage for business interruption or supply chain disruption due to a pandemic such as COVID-19," reported Insurance Business Canada. The reason: The interruptions lacked "physical damage." On the other hand, the case law informing whether a business interruption qualifies as direct physical loss or damage is developing during the pandemic. A March 30 Ontario Superior Court decision concerning a radio- active leak from a nuclear reactor will "play a central role" in how COVID-19 business interruption claims play out, according to an article by Zoran Samac and Rohan Haté, lawyers at McPhadden Samac Tuovi Haté LLP in Toronto. In MDS Inc. v. Factory Mutual Insurance COVID-19: ECONOMIC TURMOIL 3,100,000 Canadians who lost jobs or had hours reduced reduced as of April 15 1,000,000 Canadians no longer employed as of April 15 21.6 per cent Percentage decline in Canadian stock market in Q1 8.5 per cent Percentage Canadian dollar depreciated against U.S. dollar in Q1 Source: Statistics Canada keeping lawyers busy, but they've got those two big hurdles to get around," he says. Another type of claim lawyers say will skyrocket is contingent business interrup- tion, which is when the interruption happens somewhere in the supply chain, which prevents the reliant business from func- tioning. Ingress and egress insurance applies

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