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14 May 2020 / Joshua Munro , Theo Barclay
Issue: 7886 / Categories: Features , Commercial , Covid-19
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Cause & effect

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20699
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

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