Business interruption insurance & COVID-19: causation & quantum issues. Theo Barclay & Joshua Munro report
In brief
- Causation: variation due to different types of policy.
- Mitigation: a hostile battleground.
- ‘Other circumstances’ clauses: underlying market trends.
- Quantum: detailed mechanisms of calculation.
Whether a business has cover for losses caused by COVID-19 and/or the lockdown depends, of course, on policy terms. Even if there is cover, insurers may have interesting defences on points of causation and/or loss, as discussed below. If claims are not carefully formulated as to causation and quantum from the outset and/or are not based on appropriate facts, they may fail.
Causation
The causation issues engaged will vary for the different types of policy under which claims are likely to be made:
- Business interruption (BI) policies covering losses caused by restrictions imposed as a result of a notifiable disease; and
- BI policies covering losses caused by physical damage to premises.
BI policies covering losses caused by restrictions imposed as a result of a notifiable disease
Most COVID-19 related BI claims will be made under
