Page 105 - Q&A

Business interruption insurance and Covid-19

August 2020
“I’m a restauranteur and have suffered massive losses during the Covid-19
lockdown. I was just wondering whether there are any insurance options I may
have or could look into to make up for some of the losses in my business due
to Covid-19?”
To assess whether your business would be able to claim for the impact of
Covid-19, it would require an assessment of your business insurance policy
wording. Typically, the type of insurance that you could consider to claim from
should you have such, is business interruption insurance. Business interruption
insurance typically provides coverage to a business owner in the event of
interruptions to his business that affects his ability to generate income. Such
interruptions could arise from disasters such as floods, fires or other natural
disasters etc. as well as possibly infectious or contagious diseases.
Assuming you have business interruption insurance, the first step would be to
assess the wording of the policy in respect of business interruption and whether
it would cover interruptions to your business resulting from an infectious or
contagious disease such as Covid-19.
If it does, you would then have to assess whether the policy wording is sufficient
to cover an incidence like the Covid-19 pandemic. Here it is insightful to take
note of the recent case of Café Chameleon CC v Guardrisk Insurance Company
Ltd WCHC 5736/2020, where the Western Cape High Court ruled against an
insurance company and held the insurer liable to indemnify Café Chameleon
in terms of the business interruption policy section of their business insurance
policy for losses suffered since the Covid-19 outbreak.
Café Chameleon’s insurance policy indemnified Café Chameleon for business
interruption caused by a “human infectious or human contagious disease, an
outbreak of which the competent local authority has stipulated shall be notified
to them if such contagious disease is reported within a 50-kilometre radius of
Café Chameleon’s premises.”
The insurance company sought to oppose the claim arguing that Café Litigation
Chameleon’s business was interrupted by Government’s lockdown regulations
and not by the presence of a positive case of Covid-19 within its area. The
court, however, determined that there was a sufficiently close and direct link
between the Covid-19 outbreak and the regulatory regime that interrupted
Café Chameleon’s business operations and but for the Covid-19 outbreak the
regulations in terms of the Disaster Management Act would never have been
issued which in turn lead to the closure of Café Chameleon. Accordingly,
Café Chameleon was held to be covered under the scope of the business
interruption insurance.

98