Summary
A business interruption policy aggregating losses connected with a single occurrence requires an identifiable, unitary occurrence which meaningfully explains the losses. A relatively weak causal connection may suffice, but remoteness remains a distinct limitation. Whether there is one occurrence is judged from the perspective of an informed observer in the insured’s position, using reasonably available knowledge shortly after loss begins.
Government decisions and coordinated instructions may constitute occurrences. Pandemic losses may therefore aggregate across multiple insured premises. Later losses remain recoverable only where proximately caused by covered events during the policy period. Government support which reduces insured costs is generally brought into account when calculating the indemnity, absent an intention to benefit the insured to the exclusion of insurers.
Factual background
The claimant operated about 760 hospitality venues and claimed substantial business interruption losses arising from the Covid-19 pandemic under a policy written by the defendants. The policy covered notifiable disease, enforced closure and non-damage prevention of access. It aggregated loss arising from, attributable to or connected with a single occurrence into a Single Business Interruption Loss, subject to specified limits.
At the first-stage trial, the court determined issues concerning covered-event triggers, aggregation, post-policy-period causation, Additional Increased Cost of Working and the treatment of furlough payments and business rates relief. Questions of adjustment, proof of loss and the precise quantum of recoverable loss remained for later determination.
Held
The defined first-stage issues were determined. Under the disease cover, each qualifying case of Covid-19 during the policy period was a covered event. Under the enforced-closure cover, each actual closure of an insured location was a covered event, although continuation or renewal of materially identical restrictions did not create further events. Under the prevention-of-access cover, each materially different governmental action or advice was a covered event; the number was not multiplied by the number of affected premises.
The aggregation inquiry required an identifiable, unitary occurrence which meaningfully explained the losses. The words “in connection with” required a causal relationship, although it could be relatively weak, indirect and less than proximate causation. Remoteness remained a separate limitation. The inquiry was made from the perspective of an informed observer in the insured’s position, at the earliest reasonable time after business interruption loss began, using knowledge then reasonably available.
No individual Covid-19 case could aggregate all losses. Although the initial zoonotic transfer to humans was an occurrence, it was too remote. Virological antecedents and epidemiological tipping points were also unavailable as aggregating occurrences. By contrast, the coordinated governmental decisions of 16 March 2020 advising the public to avoid hospitality venues and of 20 March 2020 requiring those venues to close were single occurrences capable of aggregating losses across the claimant’s business. The governmental response from 16 to 26 March was not one continuous occurrence.
Covered cases during the policy period remained equal proximate causes of closure losses until hospitality venues were permitted to reopen in England, Scotland and Wales in July 2020. Later restrictions were principally caused by later cases and contemporary threats. Earlier cases were not proximate causes merely because cases generate later cases. Particular continuing losses, including those associated with death, long Covid, cancelled events, lost momentum and reopening costs, remained matters for proof.
The £15 million Additional Increased Cost of Working sub-limit applied per Single Business Interruption Loss. That cover ordinarily excluded economic Increased Cost of Working and could not operate as a top-up merely because the applicable limit for economic expenditure had been exhausted.
Coronavirus Job Retention Scheme payments reduced employment costs and had to be brought into account under the policy’s savings clause. Business rates relief likewise fell within that clause where the rates would normally have been payable from turnover. The position where rates were not so payable remained unresolved.
The court’s approach to earlier authorities
Available to signed-in members.
Appellate history
not stated in the judgment.
Key cases cited
The 30 most senior of 33 authorities cited.
- The Financial Conduct Authority v Arch Insurance (UK) Ltd and others [2021] UKSC 1
- Wood v Capita Insurance Services Limited [2017] UKSC 24
- AIG Europe Limited v Woodman and others [2017] UKSC 18
- Spire Healthcare Limited v Royal & Sun Alliance Insurance Limited [2022] EWCA Civ 17
- MANCHIKALAPATI AND OTHERS v ZURICH INSURANCE PLC AND ANOTHER [2020] Lloyd's Rep IR 77
- TALBOT UNDERWRITING LTD v NAUSCH, HOGAN & MURRAY INC (THE “JASCON 5”) [2006] EWCA Civ 889 [2006] 2 Lloyd's Rep 195
- SCOTT v COPENHAGEN REINSURANCE CO (UK) LTD [2003] EWCA Civ 688 [2003] Lloyd's Rep IR 696
- Campbell v Conoco (UK) Ltd & Ors [2002] EWCA Civ 704
- MANN AND HOLT v. LEXINGTON INSURANCE CO. [2001] 1 Lloyd's Rep 1
- CORBIN & KING LIMITED v AXA INSURANCE UK PLC [2022] EWHC 409 (Comm)
- The Financial Conduct Authority (FCA) v Arch Insurance (UK) Ltd & Ors [2020] EWHC 2448 (Comm)
- SIMMONDS v GAMMELL [2016] 2 Lloyd's Rep 631
- SYNERGY HEALTH (UK) LTD v CGU INSURANCE PLC AND OTHERS [2011] Lloyd's Rep IR 500
- Midland Mainline Ltd. & Ors v Commercial Union Assurance Company Ltd. & Ors [2003] EWHC 1771 (Comm)
- If P&C Insurance Ltd v Silversea Cruises Ltd. & Ors [2003] EWHC 473 (Comm)
- Castellain v Preston (1883) 11 QBD 380
- LCA Marrickville Pty Limited v Swiss Re International SE [2022] FCAFC 17
- AMI INSURANCE LTD v LEGG AND OTHERS [2018] Lloyd's Rep IR 1
- AIOI NISSAY DOWA INSURANCE CO LTD v HERALDGLEN LTD AND ANOTHER [2013] Lloyd's Rep IR 281
- STANDARD LIFE ASSURANCE LTD v ACE EUROPEAN GROUP AND OTHERS [2012] Lloyd's Rep IR 655
- Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] 4 All ER 43
- COLONIA VERSICHERUNG A.G. v. AMOCO OIL CO. [1997] 1 Lloyd's Rep 261
- KUWAIT AIRWAYS CORPORATION AND THE MINISTER OF FINANCE FOR THE STATE OF KUWAIT v. KUWAIT INSURANCE CO. S.A.K. AND OTHERS [1996] 1 Lloyd's Rep 664
- AXA REINSURANCE (U.K.) PLC. v. FIELD [1996] 2 Lloyd's Rep 233
- COX v. BANKSIDE MEMBERS AGENCY LTD. [1995] 2 Lloyd's Rep 437
- Caudle v Sharp [1995] 4 Re LR 389
- MERRETT v. CAPITOL INDEMNITY CORPORATION [1991] 1 Lloyd's Rep 169
- Fooks v Smith [1924] 2 KB 508
- Stearns v Village Main Reef Gold Mining Co (1905) 10 Com Cas 89
- Burnand v Rodocanachi (1882) 7 App Cas 333
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Cases citing this case
10 later cases · 10 positive
Most senior citing decisions:
- Gatwick Investment Ltd and others v Liberty Mutual Insurance Europe SE; Bath Racecourse Company Ltd and others v Liberty Mutual Insurance Europe SE and others [2026] UKSC 14 approved
- Liberty Mutual Insurance Europe SE & Ors v Bath Racecourse Company Limited & Ors [2025] EWCA Civ 153 applied
- Sky UK Limited & Anor v Riverstone Managing Agency Limited & Ors [2024] EWCA Civ 1567 approved
- Unipolsai Assicurazioni Spa v Covéa Insurance PLC [2024] EWCA Civ 1110
- Various Eateries Trading Limited v Allianz Insurance Plc [2024] EWCA Civ 10
- Bath Racecourse Company Ltd & Ors v Liberty Mutual Insurance Europe SE & Ors [2025] EWHC 1870 (Comm)
- Unipolsai Assicurazioni SpA v Covea Insurance PLC [2024] EWHC 253 (Comm)
- Gatwick Investment Limited & Ors v Liberty Mutual Insurance Europe SE [2024] EWHC 124 (Comm)
- World Challenge Expeditions Limited v Zurich Insurance Company Ltd [2023] EWHC 1696 (Comm)
- Sky UK Limited & Anor v Riverstone Managing Agency Limited & Ors [2023] EWHC 1207 (Comm)
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