Lloyd's Covered Lockdown Restrictions, Holiday Co. Says

By Christopher Crosby
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Law360, London (November 10, 2020, 6:43 PM GMT) -- A U.K. holiday park operator has doubled down on its bid to recoup £59 million ($77.4 million) from a Lloyd's of London syndicate due to the pandemic, arguing that lockdown restrictions, and not just the general economic downturn, are the reason vacationers haven't turned up.

In a Nov. 5 filing with the High Court, lawyers for Parkdean Resorts UK Group pushed back on Axis Managing Agency's argument that a general economic downturn is not covered under its business interruption policies.

The caravan park owner is trying to force the insurer to recognize that its insurance agreements dealing with interruption and infectious diseases cover the coronavirus outbreak, including quarantine restrictions and social distancing counts, as an "insured peril."

The idea that no one would have travelled to one of nearly 70 sites due to a lack of "public confidence" and not the government's lockdown measures "is fundamentally misconceived and inherently implausible," lawyers for the business wrote.

"The defendants' construction also fails to recognize that the occurrence of COVID-19 in the U.K. is an integral and essential element of the insured peril in respect of which coverage is afforded by the terms of the [disease clause]," they added.

The operator sued in July to force Axis to pay out after it was forced to close its caravan, camping and chalet sites as part of the government's plans to slow the spread of the virus. 

The company has argued that the insurer will only honor losses related to the parks' closures between March and May 8. However, the insurer has argued that these may amount to nothing, and that the company must show that the lockdown, and not cancellations from the general downturn in the economy, caused the losses, according to court documents.

The insurance policy at the heart of the disputes covers premises forced to close due to the outbreak of an infectious disease. Axis has "explicitly denied" that COVID-19 prevented access to Parkdean's sites, contending that the disease was present before the lockdown measures were in place and still remains prevalent.

Most of the alleged losses don't fall into the policy, as it doesn't extend to things that "merely hinder access to the insurer premises," or prevent customers from going to the parks' restaurants and bars, Axis has argued.

The policy only covers the period where COVID-19 restrictions stopped vacationers from turning up, and costs incurred after the lockdown restrictions were lifted aren't eligible, the insurer argued.

Many insurers are holding on to the payments ahead of the outcome of a major test case on whether insurers must cover closures mandated by the government during the coronavirus pandemic. The country's top court is set to consider the matter after a lower court ruled in September that insurers should have to pay out.

The claimants are represented by David Bailey QC and Jessica Sutherland of 7KBW, instructed by Taylor Wessing LLP.

The defendants are represented by Rachel Ansell QC and Martyn Naylor, instructed by Clyde & Co LLP.

The case is Parkdean Resorts UK Ltd. and others v. Axis Managing Agency Ltd., case number CL-2020-000469, in the High Court of Justice of England and Wales.

--Editing by Alyssa Miller.

For a reprint of this article, please contact reprints@law360.com.

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