The Chronicle Herald (Provincial)
COVID-19 insurance claims not covered
Companies issuing letters to policy holders
A P.E.I. insurance provider is advising its customers that they are on their own when it comes to Covid-19-related property and liability claims.
Prince Edward Island Mutual Insurance recently sent that information to customers in a letter stating that the communicable disease exclusion endorsement amendment to their policies was taking effect on Jan. 1, 2021.
The amendment indicates the company will not insure communicable disease-related claims, including those resulting in a judgment, loss of revenue, income or costs with respect to property, and bodily harm or injury liability claims.
The amendment is not unique to P.E.I. and has been showing up across Canada during the pandemic, explained Amanda Dean, vice-president for the Insurance Bureau of Canada's Atlantic region in Halifax.
As recently as October, Dean spoke to the media about the amendment appearing in New Brunswick.
She said that a factor behind the policy amendment stems from agreements with international reinsurance companies and is not necessarily reflective of a particular province's experience with COVID-19.
“The international reinsurance market has added the communicable disease exclusion to reinsurance treaties that they are now writing with primary insurers.
“Primary insurers are those companies that you and I purchase our home insurance policies through. And primary insurers purchase policies through reinsurance companies, basically so they can have access to capital when they need to pay claims. It's as simple as that,” she said.
"It's a purely business decision, quite frankly. So, if it is an Island-based insurance company or a national insurance company that also operates on the Island, they will have to take a look at their business model and any reinsurance policies that they hold and make those business decisions for themselves.”
Dean said a scenario could involve a claim arising from someone being invited into a private home and they contracted a virus during a pandemic.
“Generally, pandemic risk, which is what we all know COVID-19 is, is not insurable as the insurance industry is unable to provide protection for losses of this nature because we're also looking at this happening globally, and there's no way to diversify the risk due to it affecting the whole world at the same time.
“So, it's one of those things where insurers are looking at their book of business (a list of policies) and their business models and looking at how they can continue to offer and honour the policies they currently have,” she said.
“Some insurance companies had explicitly stated exclusions for things such as pandemics.
So, what this does is just brings to homeowners' attention a bit clearer that there is no coverage should a situation arise. The fact that homeowners are starting to receive letters and it's being spelled out is a good thing because it brings people's attention to the fact that should an action arise resulting from someone contracting COVID19 on their premise, there is no coverage.”