TD Insurance agrees to settle lawsuit over pandemic travel claims

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TD Home and Auto Insurance Company is one of the first insurers in the country to settle a class action lawsuit related to the fallout of COVID-19, agreeing to pay more than $5-million to a group of Canadian travellers who say they were wrongfully denied trip cancellation benefits.

The insurer, a subsidiary of Toronto-Dominion Bank, agreed to pay $4.8-million in compensation to any Canadians who were insured by a TD travel insurance policy between March 16, 2018, and Oct. 15, 2021, according to a notice sent to customers Oct. 25.

TD Insurance also agreed, as part of the settlement, to pay an additional $300,000 in administration costs.

In order to qualify for the compensation, TD customers must have submitted a claim for trip cancellation and been fully or partially denied due to receiving trip vouchers, coupons or credits from airlines, hotels or any other travel groups in lieu of refunds.

The settlement, which still has to be approved at a hearing scheduled for Feb. 17, 2023, comes almost exactly a year after Ontario Superior Court Justice Edward Morgan certified a $10-million lawsuit that alleged TD Insurance had breached the terms of its travel-cancellation insurance policies after denying reimbursement claims on the basis that policy holders had been offered credits or vouchers.

A TD Insurance spokesperson declined to comment on the settlement terms.

Toronto-based law firms Samfiru Tumarkin LLP and Adair Goldblatt Bieber LLP filed the class action on behalf of Kevin Lyons in September, 2020. Mr. Lyons had to cancel a 12-day vacation to Italy for himself, his wife and two children, including a one-week Mediterranean cruise. He was scheduled to leave on March 6, 2020, but cancelled the day before departure and submitted a claim with TD Insurance for $6,673.36.

TD Insurance denied Mr. Lyons’s claim because he had been offered a future credit for both the flights and with the cruise line. The legal team argued that TD’s trip cancellation policy did not exclude repaying expenses if non-monetary compensation was offered to the insured person – such as a credit.

Now, TD is offering reimbursement to three different groups of travellers.

The first group includes any traveller who had a claim related to an amount paid to Air Canada, Air France, Air Transat, British Airways, Emirates, Porter, Ryanair, Sunwing, Swoop, United Airlines and WestJet. These airlines had changed their policies after the class action was filed and made cash refunds available for certain periods. (The periods that were refunded vary by each airline.) Despite being reimbursed by airlines, TD Insurance will pay out $100 a claim.

The second group is for travellers who were not reimbursed by an airline, or had received a credit or voucher for travel costs. TD insurance will pay about 40 per cent of the value of the claim that was denied. Travellers will not have to surrender or pay back any of the credits they received or used.

The settlement will also pay out a third group that includes a combination of the first two TD Insurance clients. These are travellers who had been reimbursed by an airline, but had received a credit or voucher for another expense they tried to claim under their TD policy – such as a cruise or Airbnb. They will receive both the $100 reimbursement and approximately 40 per cent of the value of the claim that was denied.