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Fourways Mall

Fourways Mall owners take insurers to court over BI claims

It seems the courts will have to settle another dispute over the interpretation of business interruption (BI) policies – this time involving the property sector.

According to a report in the Sunday Times, Azrapart and Accelerate Property Fund, the joint owners of South Africa’s largest shopping centre, Fourways Mall, have filed papers against four insurance companies seeking about R584 million for loss of income because of the lockdown restrictions.

In court papers filed in the Gauteng High Court in November last year, Azrapart and Accelerate say AIG (which covers 70% of the mall’s insurance), Old Mutual Insure (14%), Bryte (8%) and Guardrisk (8%) are threatening to repudiate their BI claims if they offered their tenants rental relief.

The newspaper reported that, according to Azrapart and Accelerate, the insurers are relying on a clause in a standard lease which states that a tenant may not withhold any part of the rent. They argue that insurers cannot import the terms of the lease into an insurance policy.

They say they are entitled to take “reasonable steps”, including granting rental remissions, to safeguard their letting enterprises.

In their responding affidavit, the insurers say the insurance agreement does not include a clause that indemnifies the insured for BI losses due to an infectious or contagious disease.

They say that even if the agreement did include a clause that indemnified the insured for BI losses due to an infectious or contagious disease, “the plain meaning” of the agreement does not indemnify the applicants where the tenant remains liable to pay the rent and the applicants voluntarily grant a remission of rent.

They argue that, in terms of the agreement, cover was conditional on the insured paying the premium, whereas 65% of the premium has been paid. Accelerate says the premiums have been paid full.

The case is expected to be heard in May, the Sunday Times said.

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