CP Holdings Limited & Ors v Assicurazioni Generali SpA & Ors

Rectification of an insurance policy requires proof of a clear agreement that the policy failed to record. A statement that an insurer is able to include a conformity clause, with wording still to be agreed, is only a willingness to negotiate and does not establish such an agreement. The court must determine the parties’ actual renewal contract from the complete pre-contract exchanges.

Business interruption cover under the Hungarian and Romanian local policies was construed as dependent on covered physical property damage. Covid-19 losses caused by governmental restrictions, without such damage, were outside cover. The claims were not time barred, but failed for want of coverage.

The claimant companies operated hotels, spas, restaurants and offices in several European countries and sought indemnity for Covid-19 business interruption losses under global and local Generali policies. They claimed that the 2019 global policy should be rectified to include a general conformity term preserving any more favourable cover in the 2018 policy.

The court also considered whether Covid-19 business interruption losses were covered under Hungarian and Romanian local policies and whether those claims were time barred. The central issues were whether a conformity term had been agreed and whether the local policies provided freestanding, non-damage business interruption cover.

1. Rectification. The claim for rectification of the 2019 Global Policy was dismissed. The binding insurance contract was concluded by the email exchange on 28 June 2019. The earlier exchanges formed part of the negotiations leading to that contract and did not themselves establish a binding conformity agreement.
2. The wording that Generali was able to include a conformity clause, with wording to be agreed, conveyed only a willingness in principle to agree a term later. It did not amount to agreement to a general term ensuring that the insured would always receive the more favourable of the 2018 and 2019 covers. The claimant’s later response pursued only a limited proposal concerning conditions precedent. A possible limited term was not necessary to decide, and would not have supported the general rectification sought.
3. Rectification cannot be founded on what might have been agreed. It requires a clear accord which the document failed to record. The policyholder could instead sue on the prior contract as concluded, but the alleged general conformity term was not proved.
4. Global policies. The claimants accepted that Covid-19 losses were excluded by the 2019 Global Policy if it was not rectified. Questions concerning the construction of the 2018 and 2019 Global Policies therefore became academic. Had it mattered, “atypical pneumonia” in the 2018 SARS, avian flu and atypical pneumonia exclusion would have been construed in its established scientific sense, referring to pneumonia caused by specified atypical bacterial pathogens, rather than as a general reference to pandemic respiratory diseases.
5. Hungarian Policy. The policy covered business interruption caused by interruption of physical operations resulting from material damage to insured property caused by an insured peril. Covid-19 losses caused by governmental restrictions, without property damage, were outside section I.1. Alternatively, they were excluded by section I.2(c) as losses caused by authority restrictions on operation.
6. The one-year limitation term in the Hungarian General Conditions was not incorporated. In any event, the proceedings were issued within time because the claim would not have become due before the end of the 36-month indemnity period.
7. Romanian Policy. The policy provided business interruption cover only as an extension to property damage cover. The Covid-19 losses did not arise from covered property damage and therefore fell outside cover. The policy’s signed declarations also satisfied any applicable requirement for express written acceptance of unusual terms. The claims were not time barred because any indemnity obligation would have arisen only at the end of the 36-month indemnity period.
8. The court’s answers were accordingly that no relevant Covid-19 business interruption claim was covered under either local policy, while neither local-policy claim was time barred.

The judgment records a first-instance preliminary-issues trial ordered at a case management conference on 25 July 2024. No appellate decision is stated.