Business Interruption Coverage under the QBE Business Combined Insurance Policy (QBE1) and the QBE Commercial Combined Insurance Policy (QBE3)

The recent case of FCA v Arch and others [2020] EWHC 2448 (Comm) considered whether policyholders of a number of business interruption insurance products were entitled to cover in respect of the recent Coronavirus pandemic.

Two of the wordings considered were the QBE Business Combined Insurance Policy (QBE1) and the QBE Commercial Combined Insurance Policy (QBE3).

QBE1 was found to provide cover for COVID-19 interruption caused by the national government or public response to the disease in general, providing that a case of COVID "manifested" (that is to say was symptomatic or diagnosed) within the relevant 25 radius. The requirement for the condition to be symptomatic or diagnosed was more onerous than other disease wordings, which were satisfied by an occurrence of COVID whether or not symptomatic or diagnosed. As with QBE2 [Click here to read an article on that policy], QBE3 referred to an occurence of the disease within the relevant radius as "an event," which their Lordships construed (following the case of Axa Reinsurance v Field [1996] 1 WLR 1026) as requiring "something which happens at a particular time, at a particular place, in a particular way," that is to say a specific occurrence rather than a state of affairs. Accordingly, their Lordships held that there would only be cover under QBE3 if "the particular occurrences of the disease within the 25 mile radius caused the business interruption or interference." Consequently, interruption caused by a national response to a national outbreak would not be covered. 

The Wording 

QBE Business Combined Insurance Policy (QBE1)

Clause 7.3.9:

“Murder, suicide or disease

interruption of or interference with the business arising from:

a) any human infectious or human contagious disease (excluding Acquired Immune Deficiency Syndrome (AIDS) or an AIDS related condition) an outbreak of which the local authority has stipulated shall be notified to them manifested by any person whilst in the premises or within a twenty five (25) mile radius of it;

b) actual or suspected murder, suicide or sexual assault at the premises;

c) injury or illness sustained by any person arising from or traceable to foreign or injurious matter in food or drink provided in the premises;

d) vermin or pests in the premises [sic];

e) the closing of the whole or part of the premises by order of a competent public authority consequent upon defect in the drains or other sanitary arrangements at the premises.

The insurance by this clause shall only apply for the period beginning with the occurrence of the loss and ending not later than three (3) months thereafter during which the results of the business shall be affected in consequence of the damage [sic]”

QBE Commercial Combined Insurance Policy (QBE3)

Clause 3.4.8:

3.4.8 Notifiable disease, murder or suicide, food or drink poisoning

Loss resulting from interruption of or interference with the business as covered by this section in consequence of any of the following events:

a) an occurrence of a notifiable disease at the premises or attributable to food or drink supplied from the premises;

b) the discovery of any organism at the premises likely to result in the occurrence of a notifiable disease;

c) an occurrence of a notifiable disease within a radius of one (1) mile of the premises;

d) the discovery of vermin or pests at the premises which causes restrictions on the use of the premises on the order or advice of the competent local authority;

e) an accident causing defects in the drains or other sanitary arrangements at the premises which causes restrictions on the use of the premises on the order or advice of the competent local authority;

f) an occurrence of actual or suspected murder, suicide or actual or alleged sexual assault at the premises.

Provided that:
i) the insurer shall only be liable for loss arising at those

premises which are directly subject to the incident;

ii) the insurer shall not be liable for any costs incurred in cleaning, repair, replacement, recall or checking of property except as provided for in the Property section.

Definitions

‘Notifiable disease’ means illness sustained by any person resulting from any diseases that may be notifiable under the Health Protection (Notification) Regulations 2010.”

Accident was defined as- 

“A single and unexpected event, which occurs at an identifiable time and place.”

 

Summary

The Court's judgment of coverage under QBE Business Combined Insurance Policy (QBE1) is at paragraphs 224-229 and the QBE Commercial Combined Insurance Policy (QBE3)  is at paragraphs 236 - 238. 

 

In relation to QBE1, the Court held:

In relation to QBE3, the Court held:

 

KEVIN HOLDER © 2020

BARRISTER

33 BEDFORD ROW

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.