Hospitality groups serve up lawsuits in Covid insurance battle

A lawsuit brought by the owner of the Wolseley restaurant in London against insurance group Axa in a dispute over coverage of losses related to Covid is due to be heard by the High Court in January, with repercussions for British companies with similar policies.

Corbin & King, which also owns Delaunay restaurants in central London, is suing the Paris-based arm of the British insurer after it refused to pay a business interruption insurance claim made by the hospitality group.

The restaurant chain and the insurer are set to go to the Supreme Court on January 24 for a closely watched case that will examine the scope of the so-called denial of access cover – which would compensate businesses if their premises are closed by a legal body due to a local risk – and what If it has to be paid due to the pandemic lockdown.

said Roger Franklin, head of insurance claims at law firm Edwin Coe, which represents Corbin & King.

A list of companies with similar complaints submitted to their insurers has been brought to court, according to a separate person close to Corbin & King.

The question of whether, and to what extent, business interruption insurance should cover businesses against Covid-19 losses has been at the center of a long-running dispute between businesses and insurers after repeated shutdowns from March 2020 forced bars and restaurants to close.

Insurers paid around £1.2 billion in compensation to companies under such policies after the UK financial regulator, along with eight insurers, took a test case to the High Court last year seeking clarity for hundreds of thousands of policyholders. The Supreme Court ruled in January that in most cases insurers must pay.

However, the ruling did not include the drafting of every type of insurance policy, and since then there have been a series of legal claims.

Corbin & King’s claim to deny access amounts to around £4.5m, according to two people familiar with the matter.

AXA denies this on the grounds that an earlier Supreme Court ruling in the Financial Conduct Authority case found similarly worded clauses that only cover business interruptions against the consequences of accidents locally, rather than on a national scale. This point was not appealed in the Supreme Court case – which led to legal uncertainty.

The case will also determine whether Corbin & King’s Covid insurance coverage is limited to just £250,000 payable by Axa in respect of all buildings, or whether there is a limit of £250,000 per group of buildings as Corbin & King argues.

Axa said it was “continuing to work with our customers and pay claims on insurance policies where there is valid cover, as we have been since the start of the pandemic”, saying the total amount had already exceeded £86m. Corbyn and King declined to comment.

In June, the High Court will also hear Slug and Lettuce’s £845 million case against MS Amlin, Liberty Mutual Insurance in Europe and Zurich over the extent to which the hospitality group can claim compensation for Covid-related losses. The court will also consider whether vacation payments to the company can be deducted from the claims, according to two people familiar with the matter.

Stonegate, MS Amlin, Liberty and Zurich declined to comment.

Greggs is also suing Zurich for up to £100m in compensation the bakery chain says it is owed under its business interruption cover after multiple closures.

Zurich said it was “confident that we have responded to it.” [Greggs’] A fair and consistent lawsuit with the probation case filed against the insurance industry last summer,” she said, was an “ongoing legal case.” Greggs declined to comment.

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