High Court ruling opens door to fresh wave of Covid insurance claims

The High Court has ruled in favour of a group of businesses, including London’s ExCeL venue, PizzaExpress and a Mayfair nightclub that are seeking insurance payouts for Covid-19 losses, in a closely watched judgment predicted to unleash a fresh wave of claims.

The judgment, handed down on Friday, applied to ExCeL — which is seeking a £16mn payout against insurers including RSA and Allianz — and a dozen other claimants, in one of the most significant legal battles since a Supreme Court victory for policyholders two years ago.

In that January ruling, the Supreme Court decided that businesses with applicable policies could claim if there had been a case of Covid in the vicinity of their premises.

Friday’s judgment extends that logic to another group of insurance policies with clauses that cover businesses for the closure of their sites due to Covid occurring “at the premises”.

“This seems to me to be an appropriate result, since any other conclusion would give rise to anomalies which it would be difficult rationally to explain to a reasonable [small or medium-sized business] policyholder who read the policy,” said Mr Justice Jacobs.

To say otherwise, he added, would hypothetically give rise to a situation where one restaurateur who caught Covid could not claim on his own “at the premises” policy, but his next-door neighbour could use that infection to claim on their policy requiring an infection in the “vicinity”.

“It’s possible that there might be some very big claims to come out of this as well as a lot of small claims,” said Aaron Le Marquer, head of policyholder disputes at law firm Stewarts, which acted for ExCeL. He predicted the result could lead to hundreds of thousands more claims that would “significantly increase the sector’s exposure”.

Insurers’ total losses for Covid-linked business interruption claims have steadily risen as courts find in favour of policyholders on key interpretations of their coverage.

Following the Supreme Court test case alone, a total of at least £1.7bn has been paid out in partial or final settlements to businesses up and down the country. Insurers’ initial refusal to pay out on claims has also been a source of heavy criticism for the sector, and some executives have expressed regret over the episode.

In a statement, ExCeL said it was “pleased that the court has confirmed our understanding of the coverage available under the policy, and we hope that this ruling will also benefit other policyholders in a similar position”.

Becky Rogers, head of property claims in Allianz’s UK commercial business, said the insurer would need to “consider our position and in the meantime will be working through how it is likely to impact those of our policyholders who have outstanding Covid-19 business interruption claims under disease at the premises clauses”.

RSA declined to comment. PizzaExpress declined to comment.