UK policyholders win Covid-19 BI test case

A London court has backed the owners of conference centre ExCel and five other businesses in their claims for Covid-19 business interruption (BI) losses against 13 insurers. The London International Exhibition Centre, which is claiming $16m for Covid-19 closure losses, led the test case, which at its centre challenged the “at the premises” (ATP) clauses in BI policies excluded from the wider test case brought and won by the Financial Conduct Authority (FCA) in 2021.

The Commercial Court judgement said the Supreme Court’s ruling on radius disease clauses in the FCA case, in particular that each and every occurrence of Covid-19 in the UK was an equal and approximate cause of government action that led to loss, also applied to concurrent causes of closures and restrictions for policies that used ATP wordings.

Representing policyholders, law firm Stewarts Law said the ruling could have implications for other BI policyholders that have so far not received any payment.

“The judgement could potentially affect hundreds of thousands of policyholders based on previous FCA estimates as to the extent to which ATP cover was purchased, and policyholders whose BI losses remain uncompensated should now revisit their policy documents to consider whether they may now have a valid claim to pursue,” it said.

Insurers, including RSA, AXA and Allianz, argued that ATP clauses only concerned matters at the premises themselves and are markedly different from radius clauses, which provided coverage for events externally to the insured premises.

Handing down his judgement, Mr Justice Jacobs said: “The Supreme Court analysis applies on the causation argument, and none of the insurers’ arguments in support of the contrary conclusion are persuasive.”

Stewarts Law said: “The judgment provides some further finality, subject to any appeals, for issues left unresolved by the FCA test case and is therefore a helpful development for the insurance market and businesses across the UK.”