The head offices of Caisse Desjardins are seen, Wednesday, February 24, 2021 in Montreal.THE CANADIAN PRESS/Ryan Remiorz

The head offices of Caisse Desjardins are seen, Wednesday, February 24, 2021 in Montreal.THE CANADIAN PRESS/Ryan Remiorz

Desjardins drops disease-related liability, property damage coverage for some claims

Company said it will not cover them in the event they are sued for spreading a communicable disease

Insurance experts say consumers can expect more companies to introduce exclusions around COVID-19 after Desjardins dropped liability and property damage coverage related to communicable diseases.

In an undated letter to clients, the Montreal-based company said it will not cover them in the event they are sued for spreading a communicable disease, nor will it cover decontamination or property damage costs related to those diseases.

Desjardins public relations advisor Jessica Spina said the change in policy came after the reinsurance market started using communicable disease exclusions.

“Therefore, we wanted to define communicable disease in our policy wordings,” she said, in an email.

The Insurance Bureau of Canada, which represents the country’s insurance agencies, said the international reinsurance market has added these exclusions with Canadian insurers because pandemic risk is too widespread to reasonably insure.

“Generally, pandemic risk is not insurable as the insurance industry is… unable to diversify this risk due to it affecting all of the world at the same time,” said Vanessa Barrasa, a spokesperson with IBC.

Insurance experts around the country say they expect other providers to introduce similar exclusions to their coverage, depending on the level of risk they’re willing to take on.

“The name of the game in the insurance industry is to try and accurately estimate risk,” said Ian Lee, an associate professor with a background in insurance at Carleton University.

“It’s very difficult right now to estimate aggregate risk when the pandemic is mutating and coming up with different versions, and there’s different opinions from public health about how to deal with it.”

That’s why some insurance providers will want to wash their hands of certain coverage aspects for COVID-19, said Lee.

The IBC said the pandemic has presented challenges for insurance companies, especially as the pandemic coincided with an expensive year for weather-related claims.

It said Canadian insurance companies handed out $2.4 billion in payouts in 2020, although it’s hard to say whether all providers were negatively impacted because of the different risk profiles that insurers take on.

James Colaco, who leads Deloitte Canada’s insurance sector practice, said certain companies like auto insurance providers actually benefited from the pandemic, since most people continued to pay their premiums while driving less, therefore submitting fewer claims.

But he said providers who deal with small businesses have been hit hard after COVID-19 lockdowns led to many companies filing claims for business interruption payouts.

Anne Kleffner, a University of Calgary professor specializing in insurance and risk management, said the picture is murky on what insurers will and will not be required to pay for surround the pandemic.

She pointed out that some insurance companies were able to avoid paying for small business interruption claims, since some of those agreements are based on property damage, which wasn’t a factor during the pandemic.

Kleffner and Colaco said it will be interesting to see if the courts force insurance providers to pay for pandemic-related claims in the coming years, such as for business or liability claims.

“When insurers have to deal with the letter of the policy versus dealing with the public issue, things get thorny invariably,” said Colaco.

Salmaan Farooqui, The Canadian Press


Like us on Facebook and follow us on Twitter.

Coronavirusinsurance

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

As of Friday, Alberta has under 10,000 active COVID-19 cases. (Image courtesy CDC)
Alberta reports 2,271 new COVID-19 cases, Red Deer cases rise slightly

Across Alberta, there are 666 people in hospital with COVID-19, including 146 in the ICU

Alberta Health Services locked the Whistle Stop Cafe at Mirror on Wednesday morning after owner Christopher Scott refused to comply with health orders.
Photo by Paul Cowley/Advocate staff
AHS shuts down Whistle Stop Cafe for defying health orders

Health inspectors and RCMP locked doors early Wednesday

Premier Jason Kenney (File photo by THE CANADIAN PRESS)
A vial of Oxford-AstraZeneca COVID-19 vaccine is seen at a facility in Milton, Ont., on Wednesday, March 3, 2021. An Alberta woman in her 50s has died from a rare blood clot disorder after receiving the AstraZeneca vaccine. THE CANADIAN PRESS/Carlos Osorio - POOL
Alberta confirms blood clot disorder death linked to AstraZeneca vaccine

Both AstraZeneca and Johnson & Johnson vaccines have been linked to VITT in a very small number of cases

Premier Jason Kenney says with COVID-19 numbers still rising, the province’s health-care system will be tested in the coming weeks. (photography by Winston Pon/Office of the Premier)
‘Please stay home’: Kenney imposes new COVID-19 restrictions

New measures will be in place for at least three weeks

FILE - In this March 3, 2021, file photo, a vial of the Johnson & Johnson COVID-19 vaccine is displayed at South Shore University Hospital in Bay Shore, N.Y. (AP Photo/Mark Lennihan, File)
Johnson & Johnson COVID vaccine can be given to adults 30+ who can’t wait for mRNA: NACI

Panel says single shot vaccine can be especially useful for populations unable to return for second shot

B.C.’s provincial health officer, Dr. Bonnie Henry. THE CANADIAN PRESS/Jonathan Hayward
Dip in COVID-19 cases with 572 newly announced in B.C.

No new deaths have been reported but hospitalized patients are up to 481, with 161 being treated in intensive care

A dose of the Pfizer COVID-19 vaccination is prepared at a mobile clinic for members of First Nations and their partners, in Montreal, Friday, April 30, 2021. THE CANADIAN PRESS/Ryan Remiorz
Pfizer-BioNTech vaccine approved for kids 12 to 15 years old in Canada

The vaccine was previously authorized for anyone at least 16 years of age or older

Prime Minister Justin Trudeau listens to speakers appearing by video during a news conference in Ottawa on Tuesday May 4, 2021. THE CANADIAN PRESS/Adrian Wyld
Canada will align policy on ‘vaccine passports’ with international allies: Trudeau

Trudeau says Canadians could begin travelling outside the country again by summer

Ranging from 11 to 20 in age and representing seven provinces and one territory, the plaintiffs are appealing a Supreme Court judge’s decision to dismiss their lawsuit last fall. (David Suzuki Foundation)
15 youths not backing down in their fight to sue Ottawa over climate change inaction

The group has filed an appeal after their lawsuit was struck down by a Federal Court judge last fall

A 2021 census questionnaire. (Black Press Media file photo)
2021 census responses due May 11

By law, every household must complete a census questionnaire

Calgary Mayor Naheed Nenshi attends a senior’s home in Calgary on Tuesday, April 14, 2020, amid a worldwide COVID-19 pandemic. Nenshi says he’s frustrated to hear that tickets given to people for breaching COVID-19 public health orders are being thrown out in the courts.THE CANADIAN PRESS/Jeff McIntosh
‘Incredibly frustrating:’ Calgary mayor wants courts to uphold COVID-19 measures

Large groups without masks have been gathering in Calgary public spaces in protest of health measures

Jose Marchand prepares Pfizer COVID-19 vaccination doses at a mobile clinic for members of First Nations and their partners, in Montreal, Friday, April 30, 2021. The National Advisory Committee on Immunization is coming under fire after contradicting the advice Canadians have been receiving for weeks to take the first vaccine against COVID-19 that they’re offered. THE CANADIAN PRESS/Ryan Remiorz
NACI advice on ‘preferred vaccines’ for COVID-19 sparks confusion, anger

Panel said that people who can wait for an mRNA vaccine should do so

Michael Bonin, 20, from Alberta, was discovered deceased on Peers Creek Forest Service Road north of Hope on April 20, 2017. (Black Press Media)
1 of 3 accused in 2017 murder of Alberta man pleads guilty, sentenced to life in prison

Joshua Fleurant pleaded guilty in a Kelowna courtroom to the second-degree murder of Michael Bonin

Most Read