Thousands of companies are entitled to claim business interruption insurance for losses caused by the Covid-19 pandemic, the Court of Appeal has held in a landmark decision
In London International Exhibition Centre v RSA & Ors [2024] EWCA Civ 1026, the court heard six expedited test cases concerning policies providing cover for disease occurring ‘at the premises’ of the policyholder.
Handing down their judgment this week, the court dismissed insurers’ appeals on the issues of causation, knowledge and the relevance of the requirement for closure of the premises to be on the approval or advice of a medical officer of health. Lords Justice Males and Popplewell and Lady Justice Andrews confirmed businesses with an ‘at the premises’ disease clause in their policies are entitled to claim an indemnity for their loss of gross profit caused by the UK government’s response to the pandemic.
Erich Kurtz, senior associate at Hugh James, which acted for ‘Why Not Bar’, said the judgment was ‘another crucial step in providing vital legal certainty’ to businesses.
Aaron Le Marquer, partner at Stewarts, acting for ExCel, said: ‘Many policyholders who were previously denied cover may in fact have significant payments available to them under their insurance policies.’
Stewarts is also acting in Bath Racecourse & Ors v Liberty Mutual Insurance, due to be heard by the Court of Appeal in January 2025. It will determine whether insurers can deduct furlough—government payments for furloughed employees during lockdown—from Covid business insurance payouts.
In 2021, the Supreme Court clarified what policyholders with a ‘radius’ clause must prove in order to recover business interruption losses resulting from their premises closing due to government action on Covid-19, in Financial Conduct Authority v Arch Insurance (UK) [2021] UKSC 1. The case concerned loss due to disease occurring within a specified radius of the policyholder’s premises.
