Business Interruption Insurance update – Time barring suspended

Guardrisk to appeal judgment

In the recent judgment released by the Western Cape Division of the High Court on 6 July 2020, the court found in favour of Café Chameleon CC relating to the interpretation of the terms of a business interruption (BI) policy in the context of the Covid-19 pandemic.

In a media release on 13 July, Guardrisk, the insurer, indicated that it had decided to apply for leave to appeal. It also noted that it would explore avenues to provide support to businesses in the tourism and hospitality sector, but did not expand on this.

“This appeal process is likely to be lengthy and as stated, Guardrisk is committed…to implement relief measures that will enable policyholders to weather this challenging time.”

Santam extends prescription period

Business interruption claims under the extension providing for cover against loss resulting from a contagious disease, including cancellation of bookings, are subject to certain time barring conditions. Santam advised that it has suspended the running of any further time periods from 18 July 2020 until 31 October 2020.

This applies to both periods provided for under both policy conditions or, where applicable, the policyholder protection rules, regarding the making and prosecution of a claim.

Santam response to Chameleon ruling

In a letter to advisers Santam commented as follows:

“Judge Le Grange noted in his judgment that each case must be “decided upon its facts and the law” and his ruling does not open “the floodgates of liability”. In his finding, Judge Le Grange applied the “but for” test to assert that, without the prevalence of COVID-19, there would not have been a national lockdown, therefore the national lockdown forms part of the proximate cause.”

“It is our contention that a national lockdown would not be implemented for an outbreak within a specific area and that by application of the Trends clause, irrespective of an incidence of disease around a specific premise, all revenue would be impacted. As a result, claims resulting from an interruption due to the national lockdown are not covered. In our view the national lockdown is not a direct consequence of any specific insured event or a response thereto. It was a pre-emptive measure to prevent and delay the spread of the virus.”

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