Landmark Court Ruling on COVID-19 Insurance

A recent Court of Appeal judgment in London International Exhibition Centre PLC v Allianz and ors [2024] EWCA Civ 1026 has brought much-needed clarity to COVID-19-related business interruption insurance claims. The ruling, commonly referred to as the ‘Excel case,’ centers around policies that include 'at the premises' (ATP) clauses, and the judgment is expected to have a significant ripple effect on businesses that had their claims rejected or placed on hold.

The case involved a policyholder—London's Excel Exhibition Centre—challenging several insurers after their claims for losses during the pandemic were denied. The insurers argued that businesses needed to prove the specific presence of COVID-19 at their premises to recover losses under ATP clauses, as well as demonstrate that the government had knowledge of the infection at the location.

The Court of Appeal rejected these arguments, affirming that businesses do not need to prove that the specific occurrence of COVID-19 at their premises was the direct cause of their closure. The Court also dismissed the requirement that local authorities must have knowledge of the presence of the disease at the insured site for claims to be valid.

Cathy Harris, a litigation lawyer at Clarke Willmott LLP, noted that the ruling could provide the needed clarity for many businesses still struggling to settle claims related to the pandemic. "The Court’s decision opens the door wider for policyholders with ATP coverage. Insurers can no longer insist on a narrow interpretation requiring direct causation or specific knowledge of an outbreak at the premises,” she stated.

This judgment builds upon previous decisions, including the Supreme Court's ruling in the Financial Conduct Authority (FCA) test case, which dealt with policies covering diseases within a specified radius of insured premises. The Court of Appeal found that the same reasoning should apply to ATP policies, reinforcing that businesses only need to show the presence of COVID-19 at their premises during the relevant period, without needing to prove it was the primary cause of closure.

While the ruling is welcome news for many, Cathy Harris also cautioned that unresolved issues remain, particularly around the financial quantification of losses. She emphasised that each claim still needs to be considered individually, but the judgment provides a positive direction for businesses seeking to recover losses.

This decision is expected to influence future rulings on business interruption cases, especially those involving ATP clauses. Businesses affected by the pandemic are encouraged to review their claims and seek legal advice if their claims were previously denied. This case could significantly alter the landscape for thousands of businesses still struggling to recover from pandemic-induced losses.