We have devised a brief explanation of our understanding of the situation as best we can from information we have received:
Two areas of consideration:
The first is the practical consequence of the approach taken to causation (the act of causing the loss). It would seem logical that if each individual instance of someone being affected by Covid-19 is complete as to the insured peril for the occurrence of infectious disease and each has equal causative potency for lockdown restrictions, then each essentially drives the same overall composite loss.
All of the general losses from the pandemic are equally driven by each instance of infection. That seems to support the approach of there being just one continuing event, even if the force and precise effects of the lockdown vary from time to time. This is important as to the application of limits. Cover does not re-engage in a new or different way as local restrictions ease and then re-apply.
The second is it is a shame that the judgment only touched in passing on that other suite of policy wordings concerning Infectious Disease specifically “at the premises”. It may have been thought at the outset of the FCA initiative, at the beginning of the pandemic, that such wordings involved less difficulty but, in fact, that is not really so when one has to carry across the Supreme Court findings to the language of those extensions. There may well be another store of litigation locked up there.
We understand from the Supreme Court judgment that one instance of Covid-19 “at the premises” may complete the relevant insured’s risk but does not of itself trigger cover for the duration of the pandemic. But left rather open, however, are questions as to how such cover operates where there is a regular, repeating presence of infected persons at the premises. If there is an ongoing state of affairs whereby typically there is some likely level of infection at the premises – either because the public keeps visiting or there is a large workforce present – then there would seemingly be an ongoing operation of the insured peril keeping cover going. And that then poses the very tricky question of whether cover attaches more readily for the business that can remain open during the pandemic rather than one that is required to close. Rather counterintuitive perhaps if the similarly-insured, closed business loses out – because of the premises being obliged to remain a Covid-19-free island in a sea of pandemic – when the neighbouring business remains open, with some likely presence of infected persons passing through and so is covered. The Courts will not be done with this issue for a while yet.