What pending Canada Post union vote means for commercial insureds

Ottawa, Canada – September 23, 2023: A Canada Post delivery trucks on parking lot. alternate text for this image — iStock.com/Iryna Tolmachova

With a vote on more Canada Post service disruptions pending, small businesses relying on mail delivery could face business losses or insurance complications.

Federal Jobs Minister Patty Hajdu announced Thursday she’d send the Canadian Union of Postal Workers (CUPW) for a vote on Canada Post’s final offer in the parties’ ongoing labour disagreement regarding contract negotiations. CUPW and the crown corporation remain at an impasse after 18 months of negotiations.

The offer includes enhancements to pensions, job security provisions, health and retirement benefits, vacation, and cost-of-living allowances.

But CUPW argues the offer is not enough to address their concerns, and is calling postal workers to vote no.

CUPW had been in a legal strike position since May 23, but instead opted for a national ban on overtime work, which is still in effect.

Insurance impact

The on-again, off-again nature of the negotiations — plus the ongoing overtime work ban — may leave commercial insureds confused about where Canada Post deliveries stand, and whether their insurance coverage will cover a loss due to the disruptions.

In the latter case, insureds must know that postal strike delays are trade losses, not insurable losses, says Maz Moini, commercial insurance expert at Rates.ca.

“Strike-related delays, in short, are not covered by policies,” he says.

To file a successful business interruption claim, there must typically be a direct physical loss to the insured’s property.

But “almost all policies that have business interruption coverage don’t cover strike-related losses unless it’s as a result of some sort of physical damage that’s occurring,” Moini adds.

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“Certainly, in the case of Canada Post, if you have postal workers on the picket line, you’re not expecting that’s going to cause physical damage to the business.”

Mail delays and cancellation risks

The last postal worker strike in December 2024 cost Canada Post $2.8 million, according to its annual report.

But the impact on small businesses was outsized. The Canadian Federation of Independent Business estimated losses of $76 million per business day, with the total impact exceeding $1 billion in just two weeks.

Whether current negotiations again evolve into a strike, or if the overtime work bans continue, any degree of service disruption could lead to mail delivery delays.

“In the insurance context, that’s going to be things like policy documents not arriving, [plus] invoices, and reminders on policy renewals,” Moini says. “More seriously, things like claim payments, physical cheques that are being mailed out to insureds — those may get stuck in the mail as well.”

At the biggest risk of disruption, however, may be policy cancellations.

“In almost every province, regulation requires that registered mail is used for policy cancellations, and that’s routinely done through Canada Post registered mail,” he says. “So you can have potential delays or disruptions to registered cancellation notices that are being sent by the insurance companies to the insureds.”

Though insurers offer digitized insurance options, the uptake among commercial insureds — particularly small businesses — may be lower compared to personal lines insureds, suggests Moini.

“Organizations will try their best to give a heads up that a disruption is coming, but those notices also, to a certain extent, put the onus on the customer to meet them halfway.”

For small businesses, this means contacting brokers in advance to clarify coverage and digitizing insurance correspondence to minimize disruption.