In a matter followed by insurers internationally, Dunsters has opened doors for insurance relief during the COVID-19 pandemic and set a precedent for business interruption insurers to follow. The insurer, Guardrisk, welcomed the decision and immediately commenced with relief procedures for its policyholders.
The Supreme Court of Appeal (SCA) was asked to interpret whether the disease cover clause extended to losses incurred by the National Lockdown. Guardrisk assisted the insured, Café Chameleon, in ensuring the matter was heard urgently to bring legal clarity on an unprecedented and novel set of facts.
The Court held that the imposition of a National Lockdown due to COVID-19 and subsequent loss of business was connected to the terms of disease cover and that insurers should indemnify their clients under such cover.
Café Chameleon had been forced to close its doors for trading in March 2020 but will now receive financial relief from its insurance partner, Guardrisk.
The court favoured the analogy between harm caused by a government response to notifiable disease and fire insurance, which covers incidental harm unavoidably caused by fire-fighters, in response to a fire at a premises. In both cases the response to a notifiable disease by public health authorities and of fire-fighters to a fire is integral to the insured peril. The held that a sensible interpretation of the disease clause should contemplate harm attributable to a government response.
With the ongoing pandemic and cyclical government lockdowns, this judgment will sound around the world in providing guidance to insurers regarding the interpretation of their business interruption clauses.
Contact us today if you or your business are affected by business interruption.