Insurers 0, clients 3: Scale tilts against insurers once again in another lockdown claim

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All the Court rulings on business interruption claims cases have been in favour of clients.
All the Court rulings on business interruption claims cases have been in favour of clients.

Guardrisk has lost yet another lockdown claim case, this time against a popular Woodstock restaurant, the Fat Cactus Cafe.

The second blow comes as Guardrisk which is owned by Momentum is due to present its case at the Supreme Court of Appeal on why it refuses to pay for business interruption claims caused by the lockdown. The Western Cape High Court – the same court that ruled against Guardrisk in the Café Chameleon case – is also the one that ruled against Santam. Its stance is consistent: Loss of income caused by the lockdown would not have happened if there was no Covid-19.

"This court has recently considered the proper interpretation of the same disease clause…I am bound by that decision unless I find it to be distinguishable," read the judgment, citing the Café Chameleon case and the Ma-Afrika Hotels and Stellenbosch Kitchens victory against Santam which both insurers are appealing.

The Court said that Guardrisk has conceded that Covid-19 is a notifiable disease, the presence of which triggers business interruption insurance claim event.

Also, there was no mention in the policy that government's response to a notifiable disease, which in this case was a lockdown, was excluded in the business interruption cover.

Furthermore, positive Covid-19 cases were identified within the 50km radius of the restaurant, as required by the Guardrisk policy for policyholders to have a successful claim.

The Court pointed out that the National Health Act recognised a notifiable disease "may require immediate, appropriate and specific action to be taken by the national government", among other things.

For this and other technical reasons based on the insurer's policy wording, the Court said Guardrisk was liable for paying the Fat Cactus' claim and it was also ordered to pay the restaurant's costs.

"The respondent is ordered to make payments in respect of such losses as the applicants are able to calculate and quantify from time to time," read the order, leaving the quantum of Guardrisk's liability open-ended.

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