Successfully negotiating claims since 1867
Supreme Court rejects all COVID appeals from insurers
This morning’s Supreme Court judgment is welcome and encouraging. Essentially, the Court rejected all insurers’ appeals from the lower court hearing and clarified many issues. The key points are:
- If there is at least one episode of COVID-19 within the insured radius, the “continuous cause” decision of the lower court is upheld
- An instruction given by a public authority may amount to a “restriction imposed” if it carries the imminent threat of legal compulsion or is in mandatory and clear terms and indicates that compliance is required without recourse to legal powers (our emphasis) – this overturns the lower court decision that only restrictions complying with legislation give rise to a claim under the public authorities cover
- Partial inability to use premises is still an inability; the High Court decision that the inability must be total is overturned
- On causation, the Supreme Court held that if losses were also caused by other uninsured and not excluded effects of the COVID-19 pandemic, that does not exclude them
- The Orient Express case was held to have been wrongly decided: area loss of business due to COVID-19 restrictions cannot be used as a trend argument to reduce the claim
- Trend clauses serving to reduce the claim are only valid to the extent that they are not in any way COVID related
This decision is a major victory for the FCA and its joint claimants. The abandonment of the Orient Express argument is especially welcome. It means, we think, that most of the claims we have after our 2020 triage will be payable. We will shortly be in contact about handling them. The parties and the Supreme Court still have to issue declarations on which practical handling will be based, but overall, this is a very good result.
There is, though, one aspect the Supreme Court did not deal with: aggregation. This assumes some importance, given successive lockdowns, and we are setting up a strategic team with specialist lawyers to review that.