Page 105 - Q&A
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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.





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