As addressed in our previous alerts, the availability or otherwise of business interruption insurance cover in respect of losses arising from Covid-19 is of keen interest to many businesses who have been significantly affected by the pandemic.  Whilst the recent FCA test case (Financial Conduct Authority v Arch Insurance (UK) Limited and others [2021] UKSC 1) has provided hope for a number of businesses, the Newcastle Circuit Commercial Court has this week considered an issue which was not addressed in the FCA test case, namely whether a policy which included an infectious disease clause which referred to a list of specified diseases ought to respond to claims arising from Covid-19 (Rockliffe Hall Ltd v Travelers Insurance Company Ltd [2021] EWHC 412).

The Court rejected the Hotel’s claim on the basis that Covid-19 was not listed in the exhaustive list of infectious diseases specifically referred to in the policy.

The policy in question included a non-damage business interruption cover extension clause which provided cover for business interruption losses in consequence of, amongst other things:

1.        Infectious Disease manifested by any person whilst at the Business Premises which results in a closure of the whole or part of the Business Premises by the order of an appropriate competent authority.

2. An outbreak of Infectious Disease within 10 miles of the Business Premises.”

The Judge accepted that, properly construed, the “Infectious Disease” clause would only cover loss arising form one of the specified diseases listed in the policy.  The Judge took the view that the list was closed and exhaustive as it began with the words “Infectious Disease means” instead of, for example, “includes”.

It was argued on behalf of the Hotel that because the list included plague as one of the specified diseases then cover ought to be available for Covid-19 as ‘plague’ should be read as a general term for a bacterial or infectious disease with a high mortality rate, epidemic or pandemic.  The Judge rejected that argument and concluded that the word was “obviously intended” to refer to a specific disease.  He further commented that “the policy could have included “catch-all” wording, but it did not”.

The Hotel also claimed that Covid-19 could cause, or be associated with, some of the other diseases listed in the policy such as meningitis and encephalitis but again, the Judge dismissed this as an “Alice in Wonderland approach”.

No doubt there will be many further cases to follow concerning the appropriate and correct interpretation of business interruption policies and we will keep you informed of developments as they arise.  As cautioned previously, all policies must be considered individually, on their own terms.  We are able to provide advice in relation to the interpretation of specific policies.

Should you have any queries regarding the above or require any assistance, please contact our Dispute Resolution and Litigation Team on 01228 552600 or 01524 548494.

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