English and Welsh insurance contracts navigating complex aggregation issues scrutinized by the Court of Appeal
In a landmark decision, the Court of Appeal has ruled in favour of Various Eateries Trading Ltd in their dispute with Allianz Insurance Plc, providing clarity on the interpretation of aggregation clauses in business interruption insurance policies during the Covid-19 pandemic.
The case, Various Eateries Trading Ltd v Allianz Insurance Plc [2024] EWCA Civ 10, centres around the application of these clauses in composite policies, which combine multiple separate contracts within a single document. The ruling dismisses the remaining grounds of appeal from the first instance decision, confirming that policyholders can claim multiple sub-limits based on particular government actions, such as nationwide lockdowns and sector-specific restrictions.
This decision is significant for complex policies covering multiple entities or locations during the pandemic. Losses caused by separate government interventions may now be aggregated distinctly under the policy rather than being treated as a single event for aggregation and sub-limit purposes. This interpretation allows policyholders to recover separately for different qualifying instances of loss.
The Court's decision also emphasises the importance of considering the remoteness principle, which requires a lack of remoteness between the aggregating event and the losses. In this case, the Court agreed with the judge's conclusion that the outbreak in China was too remote from the insured's loss, given the large number of intermediate events and occurrences that took place between the first establishment of Covid-19 in the human population in China, its spread to the UK, and the governmental response that affected the insured's business.
Other related issues, such as the treatment of furlough payments and additional increased costs, were excluded from the continuing appeals and are expected to be revisited by the Court of Appeal in 2025.
In summary, the Various Eateries case clarifies that aggregation clauses in business interruption insurance policies should be interpreted to allow multiple claims corresponding to different government actions during the pandemic, as long as the policy wording supports such separation. This interpretation benefits policyholders seeking to maximize recoveries for Covid-19-related losses under such insurance contracts.
[1] Source: Court of Appeal Judgment, Various Eateries Trading Ltd v Allianz Insurance Plc [2024] EWCA Civ 10.
- The Various Eateries Trading Ltd vs Allianz Insurance Plc case establishes that dispute resolution involving business interruption insurance policies should consider the interpretation of aggregation clauses in finance, particularly regarding composite policies.
- The ruling in the Various Eateries Trading Ltd vs Allianz Insurance Plc case affirms that policyholders can make multiple claims based on distinct government actions, such as lockdowns and restrictions, for the purpose of dispute resolution in finance, under business interruption insurance policies during the Covid-19 pandemic.
