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Thousands of declined Covid-19 business interruption claims may need to be re-opened following a major new High Court decision in favour of policyholders

Posted: 28/06/2023

On Friday 16 June 2023, Mr Justice Jacobs handed down his hugely significant judgment in the case of London International Exhibition Centre Plc v Royal & Sun Alliance Insurance Plc & Ors [2023] EWHC 1481 (Comm). Set out over some 145 pages of detailed analysis, this is an important decision which will be welcomed by tens of thousands of businesses whose business interruption claims have previously been declined by insurers, as explained further below.

The claims

The lead action was a claim brought by London International Exhibition Centre Plc, the owners and operators of the Excel Centre in East London, against six different underwriting insurers, led by RSA.  

That claim was grouped together with five other claims where the issues in dispute were broadly similar, including a claim by various companies within the Pizza Express restaurant group against two insurers, Liberty Mutual Insurance Europe SE and XL Insurance Company SE. The remaining claimants across the other four sets of proceedings comprised individual (or groups of) smaller businesses, who brought claims against a whole host of various different defendant insurers.

The central issue in dispute across all of the claims, proceedings and policies was whether or not the Supreme Court’s approach to causation in relation to what are known as ‘radius’ type clause wordings, from the earlier FCA test case judgment in January 2021, should apply equally to what are known as ‘at the premises’ or ‘ATP’ type wordings, which were not directly considered in the earlier test case.


In the still early stages of the pandemic, the FCA and a cohort of insurers had together launched a well-publicised test case, which was initially heard in July 2020, in an effort to provide guidance to insurers and policyholders as to how business interruption policies ought to be interpreted, with regard to the unprecedented events of the pandemic and government lockdown. The Divisional Court had initially given judgment on 15 September 2020 and, following an expedited appeal process, the Supreme Court handed down its own extensive final judgment on 15 January 2021.  

Whilst the Supreme Court decision in the FCA test case does provide some helpful guidance in many cases as to how most policies ought to be interpreted, it is of course based merely on a sample of policy clause types, from a small sample of insurers. It was never therefore going to be all encompassing in dealing with every possible relevant clause. The FCA test case in particular dealt primarily with three categories of clause which may be said to provide cover in relation to the consequences of the government response to the pandemic, those being:

  • ‘radius’ type disease wordings;
  • other prevention of access clauses; and
  • hybrid clauses.

Regarding ‘radius’ type wordings, these are clauses which extend business interruption cover under a policy to cover losses resulting from cases of a notifiable disease occurring within a specified radius of the premises, typically either within 25 miles, one mile, or ‘within the vicinity’.  

The Supreme Court’s approach was, generally speaking, that each separate incident or occurrence of Covid-19 was a concurrent cause of the government restrictions. Therefore, following this approach, a business with a ‘radius’ type clause need only evidence that the business losses were the result of government action taken in response to cases of Covid-19, and that this included at least one case of Covid-19 within the defined geographical area covered by the relevant clause.  

Unfortunately, however, the FCA test case did not consider whether this same approach ought to apply to ‘at the premises’ type wordings (ie clauses providing for cover for losses caused by restrictions resulting from cases of notifiable diseases at the premises themselves, rather than within a defined vicinity). The reason for this was that no such wordings were included within the sample of policies put forward for determination by the group of insurers involved in the FCA test case, and so the Supreme Court was unable to rule as to how they should be applied.  

As a result of the above, this issue had, therefore, until now, remained an area of uncertainty, as a result of which most insurers have, to date, been consistently declining claims under clauses which include ‘at the premises’ type wording.

The judgment

The case put forward by the claimants before Mr Justice Jacobs in London International Exhibition Centre Plc v Royal & Sun Alliance Insurance Plc & Ors. was an obvious and straightforward one. They argued that ‘at the premises’ type wordings ought to be treated in precisely the same way as ‘radius’ type clauses and that there was no basis for treating these clauses any differently, simply because the defined area was narrowed down to a specific location.

The positions of the 13 defendant insurers across the various claims were more nuanced and they were not entirely in agreement with one another on every point. The starting point for all of the insurers however was to contend that ‘at the premises’ and ‘radius’ type clauses were qualitatively very different things. One insurer described them as being ‘chalk and cheese’.  

The basis upon which they argued this was that ‘radius’ type clauses expressly provided cover for events occurring externally to the insured premises (up to a certain defined distance). On the other hand, they argued that ‘at the premises’ clauses were deliberately drafted to be limited only to internal events occurring at the insured premises themselves and not elsewhere.  The insurers therefore argued that it was inappropriate to adopt the same approach to clauses which were, they said, intended fundamentally to cover different things.

Thereafter, the insurers were not entirely agreed on what approach ought then to be adopted instead. Some argued, for example, that a traditional ‘but for’ test ought to be applied. This would mean that policyholders would have to show that their losses would not have occurred but for the singular occurrence or occurrences specifically at their own insured premises alone and not those outbreaks occurring elsewhere. This would effectively prevent any claim succeeding for losses resulting from the government’s general response to the pandemic.

Other insurers, for example, argued for a seemingly novel approach to causation, described as ‘direct, distinct, palpable or discernible’ causation. Essentially, they accepted that there could be concurrent causation but argued that policyholders would first have to show that the relevant public authority was aware of the specific occurrence at the premises, that this occurrence was directly considered in the decision to impose restrictions, and that the restrictions had been to some degree targeted at the insured premises.  

It is difficult to ascertain how any policyholder could be reasonably expected to evidence the above, and so this was once again likely to prevent any claim succeeding for losses as a result of the government’s general response to the pandemic.
In any event, Mr Justice Jacobs agreed with the claimants and in so doing rejected each of the insurers’ separate cases on causation. He was not of the view that the two types of clauses were fundamentally different and held that the policyholders were correct in their submission that ‘at the premises’ is simply about the geographical scope of cover and nothing more.  

Mr Justice Jacobs noted in particular that the Supreme Court did not draw a distinction between 25 miles, 1 mile, or in the vicinity radiuses, and that there was therefore no reason why the radius could not be further shrunk from ‘the vicinity’ to ‘at the premises’ without making any difference to the causation analysis.

The judgment was not, however, a complete success for policyholders in that Mr Justice Jacobs did agree with insurers on one specific point, being that in order to trigger cover, an occurrence at the premises must have happened after 5 March 2020, this being the date when Covid-19 was first made a notifiable disease in England. However, in the grand scheme of things, this is a relatively minor point, when compared against the tens of thousands of claims which may now be reignited in consequence of this decision more generally.

Next steps

At the time of writing, it remains to be seen what steps insurers will now take in response to this decision. It is, of course, open to insurers to seek to appeal the decision, notwithstanding that the judgment is set out in extensive detail and is seemingly well-reasoned.  

Subject to any appeal, it then remains to be seen whether the thirteen insurers subject to this decision (and the various other insurers whose policies contain identical wordings but who were not directly part of this test case) will now seek to proactively revisit the claims of those customers whose claims they have historically declined in reliance on an approach to causation, which has now been found to be incorrect.  

Mr Justice Jacobs himself acknowledged at paragraph 8 of his judgment that ‘a large proportion of outstanding BI insurance claims from the pandemic may be concerned with ‘at the premises’ disease cover’. In particular, it has been suggested that there may be tens of thousands of affected policyholders and so, unless action is taken across the board, insurers may be exposing themselves to a flood of potential further litigation. 

This decision is therefore an important one and (subject to any appeal) is likely to be a significant win for many businesses and policyholders beyond just the specific claimants in the claims themselves.

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