The recent Supreme Court judgment regarding business interruption insurance – Financial Conduct Authority v Arch Insurance (UK) Limited & ors [2021] – has been broadly welcomed by businesses seeking to claim against their insurers.
However, a subsequent decision in the Commercial Court to strike out the Claimant’s case in Rockliffe Hall Ltd v Travelers Insurance Company Ltd demonstrates that not all policies will have been triggered by the pandemic, and that matters still turn on the specific policy wording used.
Rockliffe Hall Ltd v Travelers Insurance Company Ltd [2021] EWHC 412 (Comm)
Background
Rockliffe Hall, which is a golf course and hotel, has had its business devastated by the Covid-19 pandemic. It sought to recover some of its losses under its business interruption insurance cover with Travelers Insurance Company Ltd.
Unfortunately for Rockliffe Hall, Travelers disagreed that the policy wording extended to cover the impact of the pandemic. High Court Justice Cockerill agreed with Travelers’ position, and took the decision to strike out Rockliffe Hall’s claim.
The policy
The provisions under consideration by the Court related to cover for interruption to business directly caused by an outbreak of an “Infectious Disease.” The grounds for the strike out application were that “Infectious Disease” was exhaustively defined under the policy as meaning any of 34 specified diseases, including plague and food poisoning. As with the policies considered in the FCA test case, Covid-19 was not included on this list.
The Claimant argued that as the list included non-specific diseases – ones not caused by a single pathogen – the list could neither be seen as exhaustive – and thus Covid-19 could be included as an infectious disease – and/or the ‘general diseases’ listed should be given a broad interpretation. Notably, they argued that ‘plague’ should:
“be read as a general term for an infectious disease with a high mortality rate, epidemic or pandemic rather than relating to any of the specific diseases caused by the bacterium Yersinia pestis (i.e. bubonic, pneumonic or septicaemic plague).”
Therefore, Covid-19 could be included within this definition.
The judgment
Mrs Justice Cockerill rejected the arguments advanced by the Claimant. She distinguished the wording from the ‘Notifiable Disease’ clauses considered in the FCA case which she said, referring to the example of the RSA wording considered in that case, “made explicit reference to an externally-maintained and dynamic list regularly updated by the UK Government.”
In that case it was anticipated that new diseases would be added. In the case of Rockliffe Hall’s policy, she found that on a reasonably construction it was intended to be exhaustive, or a ‘closed-list’.
Furthermore, she found that arguments advanced to suggest the Covid-19 should fall under the definition of ‘plague’ were unconvincing. Attempts to give such a broad definition to the wording would give “Alice in Wonderland results.”
Implications
The result reflects the fact that whilst the FCA case was designed to provide as much clarity as possible in relation to business interruption claims, not all issues were resolved, and not every disagreement will be settled, in the Claimant’s favour. Insurance policies are still subject to long-established rules of contractual interpretation in which the precise wording used will often be crucial.
How Nelsons can help
At Nelsons, we offer fixed fee services for those uncertain of their business interruption insurance cover and/or are looking to respond to their insurer in relation to any refused claims.
For further information, please contact a member of our expert Dispute Resolution team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.