Last year, in The Financial Conduct Authority v Arch Insurance (UK) Limited, the Supreme Court considered a sample clause for Business Interruption (BI) insurance to extend, in certain circumstances, to cover the impact of the COVID-19 pandemic.
That consideration did not specifically include claims for Non-Damage (Denial of Access) (NDDA) – which were recently reviewed by the Commercial Court in London.
The claimant operates a chain of restaurants in London, including The Wolseley on Picadilly. In common with the hospitality industry, COVID-19 impacted its business.
It maintained a Business Combined Insurance policy with the defendant, which included an NDDA clause:
We will cover you for any loss insured by this section resulting from interruption or interference with the business where access to your premises is restricted or hindered for more than the franchise period shown in your schedule arising directly from:
1 the actions taken by the police or any other statutory body in response to a danger or disturbance at your premises or within a 1 mile radius of your premises.
2 the unlawful occupation of your premises by third parties
1 the insurance provided by this cover shall only apply for the period starting with the restriction or hindrance and ending after 12 weeks during which time the results of the business are affected
2 our liability for any one claim will not exceed the limit shown in your schedule.
There were two issues for the Commercial Court:
- Coverage: Did the NDDA clause provide cover for loss from a restriction on access to the claimant’s premises because of the COVID-19 regulations?
- Quantum: If so, did the policy limit of £250,000 apply to each or all of the claimant’s premises?
As the arguments raised had not been specifically considered in FCA v Arch, the Commercial Court was not bound by that decision.
On the issue of coverage, Mr Justice Cockerill determined that:
…in this context the Supreme Court’s approach to causation should be adopted. I conclude that COVID-19 is capable of being a danger within one mile of the insured premises, which, coupled with other uninsured but not excluded dangers outside, led to the regulations which caused the closure of the businesses and caused the business interruption loss.
The defendant is liable.
Overall the picture which emerges from a consideration of the wording and a consideration of the nature of the Policy persuades me without difficulty that the correct answer is that this is a composite policy in respect of which each insured is entitled to claim £250,000 in respect of each claim.per Cockerill J at § 220
The defendant’s cap on liability cap is, therefore, per claim rather than per claimant.
The High Court in Dublin reached a contrary conclusion in a case concerning the same defendant and The Clarence Hotel.
It is anticipated that the defendant may wish to appeal. We’ll keep you posted…