Greggs Plc v Zurich Insurance Plc

Under a business interruption policy, the insured loss is first established by applying the insuring clause and causation provisions. Limits of liability, including aggregation by reference to a single occurrence, are applied only afterwards. Government measures which significantly affect whether, when or to what extent insured premises may operate can constitute separate occurrences, although measures merely continuing existing restrictions or making trivial changes ordinarily do not. A coordinated governmental response does not convert materially different measures, adopted at different times and in different places, into one occurrence. Government support is taken into account in calculating loss before applying the aggregation limit. A public-relations crisis-cost sub-limit applies separately to each aggregated loss.

Greggs claimed an indemnity from Zurich under a business interruption policy for losses and related costs arising from Covid-19 and its consequences. The claim concerned stores throughout the United Kingdom and losses following closures, restrictions and later changes in government measures during the 2020 period of insurance.

The expedited trial determined agreed preliminary issues concerning the insured perils, the number and nature of covered events and aggregating occurrences, the treatment of public-relations crisis-management costs, and the effect of furlough payments under the Coronavirus Job Retention Scheme and business-rates relief. Questions concerning the existence, timing, extent, continuity, causation and quantum of any loss were reserved.

The court determined the agreed preliminary issues and ordered further submissions on the precise form of the orders.

1. Under the Prevention of Access Peril, materially different governmental restrictions or advices constituted separate covered events. Repetition, continuation or renewal of materially identical restrictions formed part of the same event. An announcement and regulations giving effect to it would usually constitute one event.
2. Under the Enforced Closure Peril, the relevant event was the actual closure of all or part of an insured location under governmental compulsion or instruction. There was one event unless the location, or the closed part, reopened and was then closed again. A coordinated governmental response did not combine otherwise separate closures or restrictions.
3. Business interruption or interference was required before an indemnity claim could arise. Each case of Covid-19 in the Vicinity was capable of causing its own interruption or interference, even where resulting periods were coterminous. The policy did not require loss to be divided into a countable number before applying its limits. The sequence was to establish business interruption loss, causation by covered events, absence of an excluded peril, and then apply the limits of liability.
4. Governmental measures significantly affecting whether, when or to what extent Greggs’ shops could operate were relevant occurrences for aggregation. Measures merely continuing existing restrictions, making trivial changes or reducing restrictions ordinarily were not separate occurrences. From May 2020, the divergent approaches of the four administrations could not be treated as one coordinated occurrence. The precise number of occurrences remained for further determination if necessary.
5. The £75,000 public-relations crisis-management-costs sub-limit applied in addition to the liability limit for each single business interruption loss. Furlough payments and business-rates relief were taken into account in assessing loss before applying the aggregation limit.