Various Eateries Trading Limited v Allianz Insurance Plc

An occurrence-based aggregation clause requires an identifiable occurrence, the causal connection specified by the wording, and an absence of remoteness. Remoteness is a flexible tool for identifying an event which meaningfully explains the losses. Its rigour depends on the strength of the contractual causal requirement.

A pandemic’s initial human infections or first arrival in the insured territory may be too remote from business interruption caused by later government restrictions. Unless the wording provides otherwise, losses at multiple insured locations may be aggregated under one occurrence. An insured event occurring during the policy period may also generate recoverable losses after that period, subject to proximate causation and the maximum indemnity period.

Various Eateries Trading Ltd operated ten insured restaurant venues and claimed more than £16 million in business interruption losses arising from the Covid-19 pandemic. Allianz Insurance Plc contended that the losses aggregated around the initial outbreak in Wuhan, limiting recovery to £2.5 million.

Butcher J determined preliminary issues concerning the Marsh Resilience Form in [2022] EWHC 2549 (Comm). He held that the initial human infections in Wuhan were too remote, but identified several relevant occurrences consisting of UK Government interventions. He also rejected aggregation separately for each insured location and held that covered events during the policy period could cause recoverable losses afterwards.

Allianz appealed on aggregation and the temporal scope of cover. Various Eateries cross-appealed on aggregation by location and sought permission on renewals, relaxations and whether every covered loss necessarily constituted a Single Business Interruption Loss.

1. Both the appeal and cross-appeal were dismissed. Permission was refused for the two additional grounds advanced by Various Eateries.

2. The remoteness applicable to an aggregation clause depends on its construction and the causal language selected. The words “in connection with”, read alongside “arise from” and “attributable to”, required a causal link but permitted a relatively weak one. Remoteness therefore applied more flexibly than under wording requiring losses to arise out of one event. The court must nevertheless identify an occurrence which significantly or meaningfully explains the losses. It must consider all relevant circumstances, including temporal and geographical unity and intervening contingencies.

3. The trial judge’s evaluation of remoteness could be disturbed only if plainly wrong or affected by an error of principle. The initial human infections in Wuhan were an occurrence with a sufficient causal connection, but they were too remote from the restaurant losses. The disease first had to become established, spread internationally and within the United Kingdom, and provoke government intervention. The later government response provided the meaningful explanation for the losses.

4. The first introduction of Covid-19 into the United Kingdom was capable of being a single occurrence and had the weak causal connection required by the policy. It was nevertheless too remote because the losses depended on subsequent widespread transmission and government action.

5. Aggregation did not operate separately for each insured location. The policy addressed interruption to the insured business as a whole, and its retention provision expressly contemplated one Single Business Interruption Loss affecting multiple locations. Corbin & King Ltd v Axa Insurance UK Plc [2022] EWHC 409 (Comm) concerned materially different insureds and wording.

6. Measures which merely continued existing restrictions, made trivial changes or relaxed them were not separate aggregating occurrences. They maintained or reduced the status quo rather than providing a new unifying explanation for losses.

7. A prevention of access or enforced closure initiated during the policy period was a covered event. Business interruption loss proximately caused by it remained recoverable after the period expired, subject to the applicable 12- or 24-month maximum indemnity period.

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 10, dismissed Allianz’s appeal and Various Eateries’ cross-appeal. It also refused Various Eateries permission to appeal on two further grounds.
2. High Court, Commercial Court: Butcher J determined preliminary insurance-coverage issues in [2022] EWHC 2549 (Comm). He rejected aggregation around the initial Wuhan infections as too remote, identified government interventions as relevant occurrences, rejected aggregation per insured location, and permitted recovery for qualifying post-policy-period losses.