Byline: Luke Patel
Readers of this publication may recall that in January of this year, the Supreme Court ruled in the Financial Conduct Authority’s test case (Financial Conduct Authority v Arch Insurance (UK) Limited and others) that insurers would have to pay out to policyholders who had business interruption insurance cover if their businesses had been disrupted by the Coronavirus. However, in a subsequent decision in the case of Rockcliffe Hall Limited v Travelers Insurance Company Limited the High Court struck out Rockcliffe Hall’s claim for business interruption cover due to the specific wording in its insurance policy.
Rockcliffe Hall was a golf course and a hotel whose business was devastated by the COVID-19 pandemic. It sought to recover some of its losses under its business interruption insurance cover with Travelers, but Travelers rejected the claim on the basis that COVID-19 was not covered by the policy.
The policy covered “infectious disease” and it defined 34 specific diseases including “the plague”, but it did not include COVID-19. Rockcliffe Hall argued that COVID-19 was covered by “the plague” because that referred to a general term for an infectious disease with a high mortality rate which includes an epidemic or pandemic. However, Travelers contended that the cover provided by the policy extended only to losses resulting from the diseases specified in the policy and that the list of diseases was a “Closed List” and one which was exhaustive.
The Judge agreed with Travelers and held that, properly construed, the policy only covered for losses resulting from the diseases listed within the policy. The Judge dismissed the argument that the list included COVID-19 due to the fact that the plague was included because the word “plague” was obviously intended to refer to a specific disease caused by the Yersinia pestis bacteria.
The Judge rejected Rockcliffe Hall’s argument that the list was similar to the list of Notifiable Diseases in the insurance policies considered in the FCA test case whereby a disease was included if it bore a reasonable similarity to the diseases listed. Instead, the Judge said that the Notifiable Disease clause expressly referred to an externally maintained and dynamic list which was regularly updated by the UK government while the policy in this case set out its own static list including the diseases known to the parties at the time the policy was taken out.
Although the FCA test case provided clarity for policyholders in relation to business interruption claims, this case highlights that all insurance policies are still subject to contractual interpretation in which the precise wording of the policy will be crucial in determining whether a specific loss is covered by the policy.
If you have a business interruption policy, then Blacks Solicitors can advise you as to whether you will be able to pursue a claim under that policy. Please contact Luke Patel on (0113)2279316 or by email at “LPate@LawBlacks.com”.