What did the High Court rule on the COVID Business Insurance test cases and appeals?
Recently, Stonegate, Greggs and various eateries sought to test coverage issues arising from the COVID-19 pandemic. And finally judgements have been published recently by the High Court into their cases.
Although the judgements are lengthy and detailed, NDML has expounded the main points. Our in-house claims expert, Stuart Dobbins, takes us through the rulings. He details three main points: Furlough, Single-policy for multiple-premises, and the issue of seperate lockdowns:
Rulings on Furlough
It has often been a criticism voiced by clients that, should they have had a claim paid for COVID-19, they nonetheless had to accept a deduction in the payment corresponding to the funds they received for furlough during the affected period. In essence, the argument has been made that, in deducting furlough payments, the insurers were benefitting from the generosity of the UK taxpayer.
This issue was addressed by the High Court but it was ruled that furlough payments do need to be deducted from any claim settlement. Specifically, the presiding judge ruled:
“The CJRS payments were in respect of an expense of the business, and resulted, in reality, in a saving of cost. For the clause to be construed so as to mean that those payments were not counted as savings would, in my view, mean that the insured would receive more than an indemnity. It should, if possible – and in my view it clearly is possible – be construed so that those payments are taken into account under the savings clause.”
Multiple premises under the same policy
We have argued repeatedly for the relevant claim sub-limit to be considered on a ‘per location’ basis for those policyholders who have one policy but multiple venues. In essence, a business may have a sub-limit of £100,000 but 50 venues, and we had argued that this sub-limit should apply to each, as opposed to simply the policy as a whole.
However this argument was also rejected by the presiding judge, who stated, in relation to the ‘Stonegate’ case:
“There was only one Insured under the Policy, namely Stonegate and not any of its subsidiaries, and the Insured’s Business was Stonegate’s business as operators of pubs, bars etc. The Policy was not a composite one, whereby separate Insured Locations owned or operated by separate insured entities each had, in effect, its own insurance. Instead the Limits of Liability were on the amounts recoverable in respect of the losses to Stonegate’s business as a whole, and in the absence of any words to that effect, cannot be read as applying per premises.”
This is an area where the judge appeared to offer some hope for those policyholders whose insurers have only considered one single claim throughout the entire period of COVID-19. The judge suggested that many events could be considered to be ‘triggers’ of a claim, with the ‘Greggs’ judgement stating:
To take England by way of example, there were in my view at least separate occurrences for the purposes of the Policy in the following: one in the bringing into force of the three-tiered system on 14
October 2020; one in the announcement on 4 November 2020 and implementation from 5 November 2020 of the second national lockdown; one in the announcement on 19 December 2020 and implementation from 20 December 2020 of the Tier Regulations (by the Health Protection (Coronavirus, Restrictions) (All Tiers and Obligations of Undertakings) (England) (Amendment) Regulations 2020).
However, this ruling needs to be treated with caution. The above quote makes clear that the judge is referring solely to the Greggs policy itself and the conclusion on this case can not necessarily be applied to all other insurers and the covers that they provide.
How does this affect our clients and other policyholders?
Needless to say, NDML will be reviewing each ruling in detail and approaching all relevant insurers to establish their position in light of these recent judgements. Once we have further information in respect of these issues we will ensure that all affected policyholders are informed of the implications for their claim.
If you have any quesitons or concerns and wish to contact us, please fill in an enquiry form and your account manager will be notified.