Fridays with Rogers Partners
At our weekly meeting, Nathan Ching discussed the recent decision of the Ontario Superior Court of Justice in Carr Law P.C. et al. v. Certas Home and Auto Ins. Co., 2026 ONSC 2203. The case is among the first of its kind to discuss business interruption coverage resulting from an organized crime attack on property intended to stop the business’ operations.
Facts
On September 6, 2019, following an attempted murder, threats to associates, and two incidents of arson, gunmen shot through the front office doors and office windows of the Plaintiff, Lisa Carr. The next day, the majority of Carr’s insurer clients fired Carr, which led to the permanent closure of her law firm, Carr Law. The Plaintiff sued the Defendant insurers, Certas Insurance, for limiting her business interruption insurance coverage. The issue is whether the Plaintiff should be granted business interruption insurance by the Defendant.
“As a Result of” is Elastic in Nature
The court followed general interpretative rules of insurance contracts because there was no binding case law that presented a similar or analogous situation. In the plain reading of the clause, the court distinguished “as a result of”, as used in the Policy, from “as a direct result of” because the absence of the word “direct” indicates that “as a result of” allows for some degree of consequential causality. Therefore, the use of “as a result of” in the Policy is elastic, which encompasses an expansive relationship between an interruption and the physical damage element.
The Insurer’s Actions Provided Objective Evidence
The court found that the decision to close Carr Law was an immediate consequence of insurer clients withdrawing a total of 2,500 active insurance law files. The immediate withdrawal of clients meant the firm had no real prospect of reforming within the indemnity period of 12 months, and therefore the Court found this to be an interruption that falls within the meaning of “business interruption” in the policy.
The Court then considered that Certas could have used “as the result of” or “solely the result of” in their policy but chose not to, and therefore they cannot alter the scope of the clause for the case. Furthermore, Certas was among the insurer clients that quickly fired Carr Law after the shooting, which was objective evidence that insurers reacted immediately, which Carr Law had no control over. Therefore, “as a result of” the physical damage, Carr Law experienced a business interruption that falls under Certas’ Policy.
Conclusions and Takeaways
The court declared that the Plaintiff was entitled to business interruption coverage from the Defendant. For the industry, this case sets the precedent for interpreting “as a result of a direct physical loss or damage from an insured peril” in the context of criminal intimidation and property damage. However, where a court may need to interpret insurance policies for novel claims for coverage, the court may employ a similarly granular analysis of linking phrases. This is an important reminder of the “intensely practical” nature of insurance contract interpretation to accommodate for novel coverage claims.