The Commercial Court has today handed down judgment in TKC London Limited v Allianz Insurance Plc  EWHC 2710 (Comm), following an application heard on 22 September 2020. The judgment is the latest decision to test the way in which business interruption insurance policies respond to the consequences of the COVID-19 pandemic.
The Claimant, TKC, operates a café business in London, which was required to close between 21 March and 4 July 2020 as a result of the nationwide lockdown restrictions. TKC was insured by Allianz under a standard form business interruption policy, which was written on an “all risks” basis, but did not contain any disease clause or relevant denial of access extension of the type considered in the recent FCA test case. The question arising was whether TKC could claim under the policy on the basis that the enforced closure and loss of use of the café constituted an insured “loss of property”.
Allianz has now successfully obtained summary judgment against the claim. The Court accepted Allianz’s submission that the policy does not respond to mere temporary loss of use, and is only triggered by the physical loss of property. The Court also considered that it was impossible for the claim to satisfy the standard form material damage proviso contained in the basis of settlement provisions of the policy. Subsidiary claims based on the deterioration of stock during lockdown and the loss of use of TKC’s premises licence were also dismissed.
The Court’s judgment emphasises the importance of legal certainty, and establishes that even in a case of “all risks” cover, conventional principles of contract interpretation should not be adapted or relaxed in response to the current pandemic. The judgment also serves to confirm that conventional damage-based business interruption wordings will not normally respond to COVID-19 losses.
Gavin Kealey QC and Keir Howie represented Allianz. They were instructed by DAC Beachcroft LLP.
Please view the judgment here.