Brewery Settles £1.7M COVID Lockdown Suit With RSA

By Lucia Osborne-Crowley
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Law360, London (May 24, 2021, 3:45 PM BST) -- A brewery has settled a dispute with its insurer over whether Royal & Sun Alliance should be forced to cover the pub chain's £1.7 million ($2.4 million) losses resulting from COVID-19 lockdowns across Britain.

Camerons Brewery Ltd., a pub chain based in northeast England, has reached a confidential settlement with RSA over its COVID-19 losses, according to a court order made on Friday. The court and the companies did not provide details of the deal.

The brewery, which owns dozens of pubs including the Head of Steam chain, asked RSA to cover £1.7 million in losses it suffered when the COVID-19 lockdowns brought much of the country to a halt in 2020.

Camerons calculated that it was owed $1.7 million, made up of claims of £100,000 — the cap on RSA's business interruption insurance — for each of its premises that was forced to close during the pandemic. But RSA rejected the claim and said it would cap the indemnity at £100,000 in total.

The brewery and pub chain sued RSA in the High Court in November, arguing that the policy it took out in 2019 included an extension that granted cover if its pubs and bars were forced to be shut by the government as a result of infectious disease.

Camerons, based in the northeastern port town of Hartlepool, said that it closed Bar Soba, in Edinburgh, on March 9 after seven of its bar staff began showing symptoms of COVID-19. It closed the rest of its locations on March 20 in compliance with Prime Minister Boris Johnson's statement, it said.

When the government eased restrictions in July, two of its pubs and bars remained closed because of their size and layout, Camerons said. Four of its sites were closed in September after members of staff showed symptoms of the virus and a further six were closed during regional lockdowns in October.

But RSA hit back at the claim, telling the court in December that it was not liable to cover any of Camerons' losses — potentially including the £100,000 it had originally admitted liability for.

RSA argued that the policy covered only government-enforced closures "as a result of" an outbreak at the premises. The insurer said that the policy was limited to a maximum £100,000 payout even if Camerons was entitled to cover and that the claim would be reduced because most drinkers would have stayed at home.

Camerons Brewery said in its claim that the £100,000 limit was linked to "any one" loss. It said that each of its premises that closed during the lockdown constituted a single loss to the company, bringing the total payout to £1.7 million.

But RSA rejected the argument, saying that the term "event" in the policy wording "any one event" encapsulated all occurrences linked to a single cause.

The two sides did not immediately respond to requests for comment on Monday.

News of the settlement comes in the wake of a landmark Supreme Court ruling on whether insurers should cover businesses for losses arising from the first COVID-19 lockdowns in 2020. The Financial Conduct Authority took insurers to court, claiming they were improperly rejecting business interruption claims.

In January, the Supreme Court upheld the High Court's ruling that went largely in favor of policyholders. The Supreme Court found that insurers should pay out if the "occurrence" of COVID-19 within the vicinity was a cause of business interruption losses.

--Additional reporting by Martin Croucher and Najiyya Budaly. Editing by Ed Harris.

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