Looking into the Corbin & King’s insurance ruling

Corbin & King were successful in their recent business interruption insurance case and the Judgement from the high Court has been released.

In the lengthy judgment handed down by the High Court, restaurant operators Corbin & King secured a judgment against its group's insurer, AXA Insurance UK Plc, in respect of the very topical issue of business interruption policy cover for claims brought as a result of Covid-19. This case was concerned with the scope of cover provided by AXA in respect of a Denial of Access (Non-Damage) clause (“NDDA”) which was contained within the Corbin & King Business Combined Insurance Policy.

In essence, Corbin and King claimed that each break in trading triggered a potential claim and that there was not just a single opportunity to do so.

The NDDA clause states as follows:

“Denial of access (non-damage) cover

We will cover you for any loss insured by this section resulting from interruption or interference with the business where access to your premises is restricted or hindered for more than the franchise period shown in your schedule arising directly from:

1 the actions taken by the police or any other statutory body in response to a danger or disturbance at your premises or within a 1 mile radius of your premises.

2 the unlawful occupation of your premises by third parties

Provided that

1 the insurance provided by this cover shall only apply for the period starting with the restriction or hindrance and ending after 12 weeks during which time the results of the business are affected

2 our liability for any one claim will not exceed the limit shown in your schedule.

We will not cover you where access to your premises is restricted or hindered as a result of

1. physical damage to property at your premises or elsewhere
2. strikes, picketing, labour disturbances or trade disputes
3. the condition of or the business conducted within your premises, or any other premises owned or occupied by you
4. notifiable diseases as detailed in the Murder, suicide or disease cover
5. actions where you have been given prior notice.”

The two key issues for the Court to determine in this case were as follows;

1. Whether the NDDA clause would respond and provide effective cover to Corbin & King for loss resulting from restrictions in access to their premises resulting from Covid- 19 regulations during the course of 2020; and
2. If the NDDA clause did provide cover, was the limit of indemnity of £250,000 in respect of all premises collectively for any one claim, or whether there was a limit of £250,000 for each set of premises.

Whilst it could be seen that the court had a minimal task of only determining two issues (warning, the Judgment is 53 pages long), Mrs Justice Cockerill, rightly and accurately illustrated that conundrum that was before the court, and details her equation below:

“ The Divisional Court thus faced a dichotomy of:

1. i) For policyholders: [covid is everywhere]+[proper construction is: everywhere triggers vicinity or radius]=[but for causation satisfied]
2. ii) For insurers: [covid is everywhere]+[everywhere cannot sensibly mean vicinity]=[never get to causation].”

Importantly, in making her Judgment, Mrs Justice Cockerill consider this case against the previously reported case of The Financial Conduct Authority (Appellant) v Arch Insurance (UK) Ltd and others, in respect of the construction of such clauses stating,

“I do therefore conclude that I am not bound by the Divisional Court's conclusions on construction. However the analysis of the Divisional Court in relation to those similar but different clauses -and albeit predicated on a rather different argument -will plainly have considerable relevance to the issues inherent in the argument.”

Mrs Justice Cockerill concluded that,

“…COVID-19 is capable of being a danger within one mile of the insured premises, which, coupled with other uninsured but not excluded dangers outside, led to the regulations which caused the closure of the businesses and caused the business interruption loss.”

Ordering that Corbin & King were entitled (indemnity or damages) to a maximum of £250,000.00 per site per each Covid related closure (i.e. March 2020, September 2020 and November 2020).

This decision does come with a warning that claims brought under Business Interruption Insurance are still very much case sensitive and will depend on the type of policy, the wording of that policy and the losses suffered by the policyholder.

A link to the full judgment is found below.

CORBIN & KING LIMITED Claimants - vs - AXA INSURANCE UK PLC