The operator of an inn in Nova Scotia has filed a lawsuit against its insurance provider, broker and underwriters, claiming that the insurers are avoiding their obligation to pay for fire damages.
MacAulay Resorts filed a notice of a lawsuit on August 24, naming OTC Insurance Brokers of Dartmouth, underwriter Markel Canada of Halifax, Evolution Insurance, and Lloyd’s Underwriters as defendants, CBC News reported.
The lawsuit is also claiming damages for the ongoing loss of business, punitive damages and costs.
“MacAuley’s Resort paid for insurance, they were told insurance was in place, up to and including June 15 and they expect that insurance contract to be honoured,” said Dennis James, a Patterson Law attorney representing MacAulay Resorts.
“At the heart of the lawsuit is two of the three underwriters appear to be disputing their obligation to honour the insurance policy.”
On June 07, 2018, guests of the Inverary Resort in Baddeck, NS were woken by a fire alarm early in the morning. All guests and personnel managed to escape unharmed, but the entire building caught fire by 3:30am.
MacAulay Resorts, which owned the inn, had filed a claim for the damages but found its insurers unwilling to pay.
A misunderstanding may be at the root of the problem; MacAulay Resorts’ lawsuit claims that the resort’s insurance was set to end by May, but was allegedly granted a 15-day extension. But two of the underwriters named as defendants said that they were not informed of the extension, and thus refused to pay out their portion of the policy worth more than $4 million.
James stated that there could be a communication problem between Evolution – which issued the policy – and its underwriters.
The attorney added that Everest Canada did pay a portion of its shares - but has yet to complete the entire payout.
“There appears to be a dispute between the broker and the insurance company as to whether that [the pub] was included,” James additionally suggested.
Reconstruction of the resort will be delayed until the entire policy is settled, James said.
