Pub and hotel companies in parallel legal challenges on Covid Business Interruption claims

Two major hospitality businesses, pub group Fuller Smith & Turner Plc and hotel company Starboard Hotels Limited, have filed matching lawsuits against their insurers for non-payment of business interruption claims relating to the Covid pandemic and lockdowns.

The claims by Fullers against two insurers, Liberty Mutual Insurance Europe SE and Aviva Insurance, and by Starboard against just Liberty Mutual Insurance Europe SE allege they should be indemnified for loss of income flowing from the lockdowns in 2020.

Both claims argue that losses suffered at each premises should count as a separate claim under the policy subject to the limit of £1m each. Fullers’ claim form states the company had 392 premises; Starboard details 21 premises.

The Fullers claim states: “Each interruption or interference…with the Claimant’s business carried on in each of the premises specified in Schedule 1 hereof provides the Claimant with a separate claim each with its separate Limit of £1,000,000 and Indemnity Period of 3 months.”

Similarly the Starboard claim argues: “The said Policy of Insurance was a composite policy and, accordingly constituted distinct and separate contracts of insurance between the Defendant and each Claimant albeit that those contracts were embodied in the same physical policy document.”

Both legal pleadings also argue how actions taken by the police and central Government to lockdown businesses in March 2020 was captured by clauses in their insurance contracts for losses: “…following interference with the Business carried out by the Insured in consequence of action by the Police or other Statutory Authority following danger or disturbance within 1 mile of the Premises which shall prevent or hinder use of the Premises or access thereto or, interference with the Business carried out by the Insured.”

Defence documents have yet to be filed in both cases.

Mactavish analysis:

The fact that the lawsuits filed by Fullers and Starboard use the same language and pursue the same arguments is more than just coincidence and because the two companies have the same legal representation. The mirror nature of the two claims brings to life how similar many Covid BI claims have now become, centring on the same arguments around aggregation and the interpretation of whether the Government lockdowns amounted to Presentation of Access under the policies, following up on recent judgments on related sectors such as Stonegate in the UK or FBD in Ireland. The great shame with these cases is how they are having to be litigated individually with all of the costs and potential access to justice issues that entails. It’s not just that insurers are standing firm on their interpretation of the policies, it is that the test case on Covid BI claims, brought by the Financial Conduct Authority two years ago did not resolve these questions. An opportunity missed.

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