Allianz loses appeal in Covid-19 business interruption case

Allianz has lost an appeal in a major Covid-19 business interruption claim in a decision that looks set to close a chapter of major court battles linked to such disputes.

The issue of whether firms could make a business interruption claim with their insurers as a result of losses during the Covid-19 pandemic was broadly settled by the Supreme Court back in 2021.

It ruled it that ‘disease’ and ‘prevention of access’ clauses in companies’ insurance policies provide cover in the circumstances of Covid-19.

However, there were several gaps that weren’t covered in the judgment because they weren’t included in the initial appeal, leaving the door open to more business interruption court cases between insurers and policy holders.

Pub company Stonegate Group, restaurant chain owner Various Eateries and Greggs all pursued claims against their insurers as they sought legal clarity around areas such as aggregation, causation and business rates relief.

Aggregation refers to the issue of the number of claims that can be considered to be one claim for the purposes of an insurance policy excess, while causation plays a key role in linking the cause with the effect of the damage when deciding whether the insurer is liable to pay out to the insured.

The High Court heard all three claims together, with the court ruling broadly in favour of the insurers in October 2022.

While Stonegate and Greggs decided to settle with their respective insurers, both Various Eateries, which operates restaurant chain Coppa Club, and Allianz lodged appeals against different aspects of the High Court ruling.

Allianz’s appeal focused on aggregation issues, arguing that Various Eateries’ losses arose from a single occurrence, namely the initial outbreak of Covid-19 was in Wuhan, China, which would cap liability at £2.5m.

While Various Eateries’ appeal argued that there was no single occurrence, enabling it to recover many multiples of the £2.5m, subject to proof of loss. It also argued that the aggregation should be on a “per insured location” basis, meaning the £2.5m should be applied separately to each of its restaurants.

But today the Court of Appeal today rejected both of their arguments.

Despite losing, Lee Watts, director of technical claims, Allianz Commercial said the firm welcomed the judgment, so it can “now work with Various Eateries… in bringing their claims to a final resolution”.

Various Eateries did not respond to a request for comment.