Last month saw reports that the pub firm, Fuller, Smith & Turner Plc ("Fuller's") had become the latest high profile business interruption insurance ("BII") claimant. With more information now available, we consider the nature of Fuller's claims and how the proceedings fit within the wider picture of Covid-19 related BII claims.
The basics
Issued on 1 February 2023, Fuller's claim against Liberty Mutual Insurance Europe SE and Aviva Insurance Limited centres around alleged cover under a Prevention of Access (Non Damage) clause in the following terms:
“Section 2 is extended to include loss following interference with the Business carried out by the Insured in consequence of action by the Police or other Statutory Authority following danger or disturbance within 1 mile of the Premises which shall prevent or hinder use of the Premises or access thereto or, interference with the Business carried out by the Insured."
In brief, Fuller's case is predicated on the basis that:
(1) Interference to Fuller's business resulted from the UK government's introduction of regulations early on in the pandemic which severely restricted the ability for hospitality businesses to open and prevented or hindered the use of Fuller's premises; and/or
(2) Interference to Fuller's business resulted from the actions of the police (because the government's regulations were enforceable and enforced by the police) which prevented or hindered the use of Fuller's premises.
Limit of liability
According to Fuller's claim, the policy in question set a limit for the Prevention of Access (Non Damage) cover of £1,000,000 and a maximum indemnity period of 3 months. However, that does not, on Fuller's case, mean that total liability under the relevant clause is limited to £1,000,000.
Fuller's say that it is entitled to an indemnity limited to £1,000,000, and an indemnity period of 3 months, in respect of each prevention or hindrance of access or use in respect of, or interference with business carried on in, each of its premises. Fuller's seeks a declaration to that effect and an indemnity to be calculated and paid on this basis.
To put this into context, Fuller's claims to have been operating out of almost 400 premises in March 2020. The value of the claim clearly has the potential to be very significant.
Claim for damages
The particulars of claim state that Liberty Mutual and Aviva each wrote 50% of the risk under the policy. However, in addition to the indemnity claimed, Fuller's allege that it is entitled to damages for breach of an implied term of the insurance contract (under section 13A(1) of the Insurance Act 2015).
This aspect of the claim relates to an alleged refusal on the part of the insurers to pay the indemnity or, importantly, to engage in any discussions as to its quantum. Fuller's argue that the insurers should have admitted liability in principle and engaged in discussions as to quantum within 2 weeks of the handing down of the judgment in the proceedings brought by Corbyn & King against Axa.
In the Corbyn & King claim, the court considered a combined business insurance policy which had been issued to 11 named companies and covered numerous premises. The court was required to determine both whether a Denial of Access (Non-Damage) clause provided cover and whether the policy limit applied in respect of the premises taken together, or in respect of each set of premises held by the different named companies. The claimants were successful in both regards.
The wider context
It is anticipated that this claim will be actively case managed alongside other BII claims in the Commercial Court. A case management related order has already been made by Mr Justice Jacobs, although it is not publicly available.
Similar proceedings were issued on the same date by Starboard Hotels Ltd, also against Liberty Mutual. Indeed, Starboard and Fuller's have the same legal representation in respect of the claims. Starboard's pleading though also raises issues around whether or not there is a need to account for grants received under the Coronavirus Job Retention Scheme.
It will be interesting to see how the claims progress, and in particular how the insurers choose to respond. It's only once we see defences to these claims that we will be able to identify with certainty the issues falling to be determined by the court.
In light of the Corbyn & King decision, and based upon Fuller's and Starboard's pleaded cases, it is notable that the claims have not yet been capable of resolution with the insurers. We have seen, and will no doubt continue to see, a steady stream of BII claims going to court. However, the court issued proceedings are likely to be the tip of the iceberg of claims submitted to insurers. The vast majority, with the help of authority from the FCA test case and subsequent court decisions on Covid-19 BII, should be capable of settlement. Not least because insurers will want to avoid being involved in the next authority with the potential to open the floodgates.
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