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Rick Westhead

TSN Senior Correspondent

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The Kingston Frontenacs and Sudbury Wolves of the Ontario Hockey League have filed lawsuits against insurance companies alleging that the insurers breached their contracts after refusing to cover the teams’ financial losses due to the COVID-19 pandemic.

The Frontenacs filed a $1.1 million lawsuit against Lloyd’s Insurance Co. on Jan. 22, 2021, in Ontario Superior Court in Kingston. The team has asked a judge to rule that the insurer is guilty of negligence and of engaging in unfair or deceptive acts or practices. The Frontenacs have asked a judge to demand Lloyd’s pay $1 million for lost revenue and another $100,000 in punitive damages.

The Wolves, meanwhile, filed a $1-million lawsuit against Intact Insurance Co. on March 12 in Ontario Superior Court in Sudbury.

Frontenacs lawyer Hovsep Afarian and Wolves lawyer Gord McGuire declined to comment. Spokespeople for Lloyd’s and Intact did not respond to requests for comment.

The OHL was the only Canadian major junior hockey league that did not play a game this season. The OHL canceled its season Apr. 20 after the Ontario government, amid a surging third wave of the coronavirus pandemic, refused to approve the league's plan to stage a shortened season in hub cities.

Since the pandemic began in early 2020, insurance companies around the globe have defended allegations from policy holders in numerous industries that they have wrongly refused to honour insurance claims. Many disputes have ended up in court.

Major League Baseball and its clubs have filed a lawsuit in California against three insurers who denied their claims over COVID-related losses.

The Frontenacs allege in their 24-page claim that Lloyd’s drafted “template rejection letters” that had the effect of “misrepresenting the extent of coverage available … and discouraging the Plaintiffs from pursuing their claim any further.”

The team wrote in its claim that COVID-19 is tantamount to structural damage and should be treated like a fire or flood.

 “The coronavirus has come into contact with and changed physical surfaces and objects within the premises," the Frontenacs wrote. "The presence of the virus on these surfaces and objects is a physical alteration which renders them, and the premises, unsafe and unfit for use. The coronavirus also renders the air in the insured premises unsafe because suspended droplets or aerosols are physically present in the air, and pose a risk of transmission through inhalation or contact with the eyes, nose, or mouth. There is a physical change to the air in such situations, just like there would be in the event of a gas leak or the release of a poisonous substance.”

The Frontenacs did not detail their financial losses from shutting down because of COVID-19. According to the team’s financial statements filed in court in connection with a still unresolved minimum-wage class action lawsuit (a settlement in that case has yet to be approved by a judge), the Frontenacs reported a profit of $707,488 on revenue of $1.3 million during the fiscal 2016 year.

According to the Wolves’ lawsuit, the City of Sudbury ordered the closure of certain public facilities, including the team’s arena, on March 16, 2020.

The Wolves wrote in their claim that they submitted an insurance claim for business interruption six months later, on Sept. 9. 

On Oct. 5, Intact informed the team that it was denying the claim, the Wolves said.

“Intact has thereby acted in breach of contract and is liable to the Club for damages for same,” the Wolves wrote. “These damages are estimated to be $1,000,000, the particulars of which will be provided before trial.”

Sudbury’s most recently available financial documents indicate the team turned a profit of $90,638 during 2014 on revenue of $3.6 million.