Attempt to Aggregate Limit of Indemnity

Corbin & King Ltd v Axa Insurance UK plc [2022] EWHC 409 (Comm) -

London 20th June 2022

Corbin & King Ltd v Axa Insurance UK plc is the latest English case to consider the application of Business Interruption cover to Covid-19 after the decision of the Supreme Court in Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] Lloyd’s Rep IR 63.

The case may be of interest to Insureds generally as one of the issues considered was how the financial limits of the policy applied where a number of companies were all named Insureds.

The policy under consideration was a Business Combined Insurance Policy and the Business Interruption section of the policy contained a Denial of Access (Non-Damage) Clause which had a sub-limit of £250,000.

It was concluded that the Denial of Access (Non-Damage) Clause in the current case was sufficiently different from those considered in Financial Conduct Authority v Arch Insurance (UK) Ltd so as to justify a separate appraisal. The Axa wording referred to danger or disturbance at or within a radius of the Insured’s premises and there was a disease exclusion. The Denial of Access (Non-Damage) Clauses considered in Arch variously referred to emergencies or incidents, vicinity and did not all exclude disease.

In the case of Corbin & King Ltd v Axa it was found that whilst there was a disease exclusion it did not extend to Covid-19, thereby demonstrating that some diseases were intended to be covered. It was deemed that the owner of a small or medium sized enterprise, reading the clause, would have concluded that there was cover for diseases not listed in the exclusion.

With regards to the measure of indemnity, it was accepted that the claimants were entitled to an indemnity of £250,000 for each of three lockdown events, totalling £750,000. However, the issue remained as to whether the £750,000 applied to each of the premises insured or whether the £750,000 indemnity figure was an aggregate of the loss suffered by all of the premises.

The Insured was defined as “Corbin & King Limited and Subsidiaries”, each of the subsidiaries was named in the schedule to the policy, with the schedule listing twelve different premises. The Denial of Access (Non-Damage) Clause being triggered where “access to your premises is restricted or hindered”.

It was held that the policy in question was a composite policy and that each of the companies had a separate interest represented by the premises that it operated. Accordingly, the policy was to be construed on the basis that there was not a single limit and that if there were separate incidents at two or more of the premises then the expectation would be that there would be a full indemnity for each one.