Allianz Hit With Biz Interruption Suit Over Pandemic Closure

By Bonnie Eslinger
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Law360, London (May 5, 2020, 6:32 PM BST) -- A London cafe's suit against Allianz Insurance PCL has joined the expected surge of litigation against insurers from businesses saying they've been denied coverage for COVID-19-related business interruption losses.

The High Court claim from the owners of Kensington Creperie seeks a judicial declaration that it will be covered for the pandemic-related losses caused by the forced closure of its restaurant under its $2.7 million ($3.36 million) Allianz policy.

The cafe, located in an affluent area of London, says it shuttered its doors on March 21 in accordance with the public health regulation passed by government officials and has suffered financial losses due to the food that went to waste.

"In the circumstances the claimant asserts that it is entitled to be indemnified in respect of its losses resulting from the interruption of or interference with its business caused by the closure of its business premises and/or the loss and destruction of its stock," the suit states.

The London cafe says it should also be covered for the alcohol sales it didn't ring up as a result of the pandemic shutdown.

Since the public health crisis is still ongoing, the cafe's owner, TKC London Ltd., said it can't provide the court with a damages total just yet.

"The claimant's losses are ongoing and it is not possible to particularize or quantify such losses at this juncture," the cafe's suit states. "Further, it is likely that the business interruption losses suffered by the claimant will continue for some time after the end of the relevant period."

According to the claim, which was filed on April 16 but made publicly available this week, TKC has a commercial insurance policy from Allianz for a year period that began September 2019.

The insurance terms include coverage for business interruption loss "resulting from interruption of or interference with the business carried on by the insured at the premises in consequence of an event to property used by the insured" at the business premises.

The policy also includes indemnity for "accidental loss or destruction of or damage to property used by the insured at the premises for the purpose of the business."

The indemnity period starts with the occurrence of the "event" and ends in 18 months, the suit states.

Coverage is also provided under the insurance policy for "forfeiture, suspension or withdrawal" of a liquor license.

The claim does not state the reason Allianz gave for declining coverage to the cafe.

Tim Marland of Quadrant Chambers, acting for the restaurant, told Law60 that, although it welcomed the Financial Conduct Authority's announcement last week that it will seek judgment at the High Court on insurers' liability in a range of business interruption policies, there was no certainty about wordings, nor what the regulator's timetable might be.

The case is part of a rapidly rising tide of litigation against insurers over whether business interruption policies cover pandemic-related closures.

Last month, the Association of British Insurers, a trade body representing the sector, told the parliamentary Treasury Committee that their members have estimated they will pay out approximately £1.2 billion ($1.5 billion) to support businesses affected by the COVID-19 outbreak.

But widespread refusal to pay out on business interruption claims by some insurers has some shop and restaurant owners looking into their legal options as the government-ordered restrictions stretch into a second month.

Lawyers are readying arguments to contest the broad refusal by insurers, setting up litigation over liability that could change how the industry writes future policies.

Commercial insurer Hiscox Ltd. has emerged as an early target for legal challenges. A public relations company said last month it is looking into launching class action litigation to cover pandemic-linked losses.

Representatives for the parties did not immediately respond to Law360's request for comment Tuesday.

TKC London Ltd. is represented by Tim Marland of Quadrant Chambers, instructed by Memery Crystal LLP.

Counsel information for Allianz was not available Tuesday.

The case is TKC London Ltd. v. Allianz Insurance PLC, case number CL-2020-000219, in the Commercial Court of the High Court of Justice of England and Wales.

--Additional reporting by Martin Croucher. Editing by Alyssa Miller.

Update: This story has been updated to add comment from a lawyer acting for the restaurant.

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