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Law360, London (May 25, 2021, 4:33 PM BST) -- AXA has told the High Court it doesn't owe the owner of London's Wolseley restaurant £6 million ($8.5 million) under a business interruption policy because sales lost during England's coronavirus lockdowns were not a localized incident, which the insurer said the policy requires.
AXA Insurance UK PLC said in its defense filed on Thursday that its denial-of-access coverage for Corbin & King Ltd. protected the restaurant group's venues only from localized disturbances.
"Any restriction on, or hindrance to, access to the premises must arise directly from actions taken by police or any statutory authority in response to the danger or disturbance at the premises or within a one-mile radius of the premises, and not actions taken at a national level, in response to a national emergency," AXA said.
Corbin & King, which operates eight London restaurants including the Wolseley, the Delaunay and Brasserie Zédel, sued AXA in April to recover up to £6 million under its denial-of-access coverage. The cover is a type of business interruption policy that protects companies against their venues being shut by a statutory body because of a local danger.
The U.K. government ordered a national lockdown in March 2020 in a bid to control the spread of COVID-19, forcing the closure of pubs and restaurants. Hospitality venues were allowed to open their doors again in the summer, but a resurgence of infections prompted curfews and restrictions in September. Prime Minister Boris Johnson announced a second national lockdown in November, which again closed restaurants.
Corbin & King says it had to close or adapt its venues three times during 2020. This means that each venue should have received up to £250,000 from AXA each time as they were separately insured and each government restriction constituted a different incident under the policy, according to the April claim.
But AXA said in its defense filing that none of the government's lockdowns or restrictions was made in response to a danger or disturbance at any of the restaurants, or within a one-mile radius. This was a condition to get a payout under the policy, the insurer said.
"The measures taken by the government in the period from March to November 2020 ... were taken in response only to the spread of COVID-19 in the country as a whole," AXA said.
AXA said the denial-of-access coverage pays out for only localized dangers that arise directly from actions by the police or a statutory authority in response to a disturbance at a business or within one mile "and not actions taken at a national level, in response to a national emergency."
The insurer added that the most the restaurant operator could recover would be £750,000, rather than £6 million. That is because the sum insured for each of the three sets of government restrictions would only be £250,000 for all the restaurants.
AXA also issued a counterclaim, seeking a declaration that it should not indemnify Corbin & King and that the total would be limited to £750,000 anyway. The insurer is also looking to recover costs.
Representatives for Corbin & King did not immediately respond to requests for comment on Tuesday.
The question of whether business interruption policies should have paid out because of the lockdowns has already gone to the U.K. Supreme Court. Britain's top court found in favor of many policyholders in January after the Financial Conduct Authority brought a test case on their behalf.
The test case shined a light on so-called non-damage extensions to business interruption insurance. Policies for interrupted business often offer coverage only if a company is forced to close as a result of physical damage to a property.
Many insurers refused to pay out on claims after the country was first locked down in March and the coronavirus outbreak took hold, saying such policies were not intended to cover global pandemics.
AXA declined to comment on Tuesday. But the insurer has said that the FCA's test case decided that wording in line with that found in the restaurant group's policy did not provide any cover.
Corbin & King is represented by Jeffrey Gruder QC of Essex Court Chambers, instructed by Edwin Coe LLP.
AXA is represented by Aidan Christie QC of 4 Pump Court, instructed by DAC Beachcroft Claims Ltd.
The case is Corbin & King Ltd. and others v. AXA Insurance UK PLC, case number CL-2021-000235, in the High Court of Justice of England and Wales.
--Additional reporting by Joanne Faulkner. Editing by Joe Millis.
Updated: This story has been updated to reflect the fact that AX declined to comment.
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