Covid Business Interruption Insurance Claims

In the current turbulent times, it is easy to forget some of the industry's recent challenges and the disappointment many operators felt when advised by their insurers that the cover they thought they had for business closure or disruption did not apply due to the novel nature of Covid 19 or the small print in their policies.

Since then, a number of operators have battled the big insurance giants in the courts and we have reported on the judgements as each one was released, however, the previous decisions have either not answered all the issues or have been bespoke to the policy subject to judicial scrutiny at that time.

Yesterday further decisions were released by the courts. The first is Greggs and Zurich - one of the policy limitations relied on by the insurance companies is the number of times a claim could be made, for example only one for the whole of the pandemic. Zurich had initially contended Greggs could only claim for a single occurrence under its policy, which would mean applying a £2.5m limit to all of its business insurance losses caused by the covid lockdowns. Greggs argued that this could not be correct, and a new limit was triggered each time each of the devolved governments did an intervention-lockdown or restriction. Mr Justice Butcher in looking at the Zurich policy believes it could be triggered by multiple events

“To take England by way of example, there were in my view at least separate occurrences for the purposes of the Policy in the following: one in the bringing into force of the three-tiered system on 14 October 2020; one in the announcement on 4 November 2020 and implementation from 5 November 2020 of the second national lockdown; one in the announcement on 19 December 2020 and implementation from 20 December 2020 of the Tier Regulations (by the Health Protection (Coronavirus, Restrictions) (All Tiers and Obligations of Undertakings) (England) (Amendment) Regulations 2020)”.

This ruling can of course be appealed and only if it is allowed to stand can the next part of the process start - how much is the claim worth?

This judgement at least brings some hope of a fairer potential settlement to many hospitality operators.

However, a second judgement delivered yesterday is not quite so positive for the hospitality industry One of the ongoing arguments has been around policies covering numerous properties and if the limit on the policy was a global figure or applied to each property or venue operated under the policy. Stonegate have been in court on this point. Stonegate claimed it was entitled to a separate insurance limit for each of its 760 individual venues and contended they should each be looked at in their own right as they were all slightly different in their operation and reaction to the pandemic.

However, this argument was rejected by the judge, who stated, in relation to the ‘Stonegate’ case:

“There was only one Insured under the Policy, namely Stonegate and not any of its subsidiaries, and the Insured’s Business was Stonegate’s business as operators of pubs, bars etc. The Policy was not a composite one, whereby separate Insured Locations owned or operated by separate insured entities each had, in effect, its own insurance. Instead the Limits of Liability were on the amounts recoverable in respect of the losses to Stonegate’s business as a whole, and in the absence of any words to that effect, cannot be read as applying per premises.”

Again this is particular to the wording of this policy and other policies may be deemed to be more extensive in their coverage.

Insurance law is a complex area and if you think you have a potential claim following these decisions we recommend you seek expert legal advice.