London International Exhibition Centre Plc v Allianz Insurance PLC & Ors
[2024] EWCA Civ 1026
International Entertainment Holdings Limited & Ors v Allianz Insurance PLC
28 October 2024
[2024] EWCA Civ 1281
Court of Appeal
Fifteen theatres sued their insurer because they had to close due to Covid-19. The insurer said their policy only covered closures caused by the police, not the government. The court agreed with the insurer. It also ruled the policy's £500,000 limit applied to each theatre, not the whole group.
Key Facts
- •Appeal concerning the interpretation of a 'Non-Damage Denial of Access' (NDDA) clause in a business interruption insurance policy.
- •Claims arose from the closure of entertainment venues due to Covid-19 regulations in England.
- •Policy included a separate Disease clause, but Covid-19 wasn't a specified disease.
- •The policyholders (15 theatre companies) argued that the government's actions constituted a 'policing authority' action under the NDDA clause.
- •The policy had a £500,000 limit per claim, and the insurer argued this should be an aggregate limit.
Legal Principles
Insurance policies are interpreted objectively, considering what a reasonable person would understand.
FCA v Arch SC at [47]
In interpreting business interruption policies, the reference point is an ordinary policyholder, not a lawyer.
FCA v Arch SC at [77]
Insurance policies are sometimes clumsily drafted or use a 'pick and mix' approach, meaning consistent terminology across clauses may not be assumed.
Bellini N/E Ltd v Brit UW Ltd [2024] EWCA Civ 435: [34]
Corrective interpretation (rectification by construction) can be applied if there is a clear mistake and a clear correction, based on what a reasonable person would understand.
East v Pantiles (Plant Hire) Ltd (1982) 2 EGLR 111 and Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101 at [22]–[25]; Bellini at [18] and [19]
Outcomes
The Secretary of State for Health and Social Care is not a 'policing authority' within the meaning of the NDDA clause.
A reasonable policyholder would not interpret 'policing authority' to include central government enacting legislation, even for public safety. The word 'policing' necessitates authorities carrying out policing functions, not simply restricting access.
A case of Covid-19, without more, does not amount to an 'incident likely to endanger human life'.
While an 'incident' can be synonymous with 'event' or 'occurrence', in this context, it requires an event endangering human life or property that necessitates a policing authority response. The presence of Covid-19 alone, without an observable event, does not meet this threshold.
The Covid-19 incident (if it were one) must occur within the one-mile radius.
This interpretation provides certainty and straightforward application, unlike allowing the incident to be anywhere that endangers life within the radius.
The £500,000 limit applies separately to each insured premises, not each claimant.
The insured peril is specific to each premises; the closure of each gives rise to a separate claim. Applying the limit per claimant, rather than per premises, would be capricious given the policy's structure.
There is no aggregate £500,000 limit.
While there was a possible drafting error, it wasn't clear what the correction should be. Multiple reasonable interpretations existed, and the court didn't find sufficient basis to apply corrective interpretation.