Prevention Of Access Clauses Revisited

• Published date: 17 March 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Coronavirus (COVID-19), Insurance Laws and Products, Trials & Appeals & Compensation, Insurance Claims
• Law Firm: Herbert Smith Freehills
• Author: Mr Greig Anderson, Antonia Pegden and Sarah Irons

In Corbin & King v AXA Insurance Plc [2022] EWHC 409 (Comm), the High Court considered the scope of insurance cover provided by a 'prevention of access' extension for COVID-19 business interruption losses. While the Divisional Court in the FCA Test Case concerning COVID-19 business interruption insurance had generally found that Prevention of Access clauses did not provide cover in these circumstances, the Court in this case was able to distinguish the clauses considered previously so that the wording in this case could be looked at afresh.

The Court found that COVID-19 was a "danger" and that the prevention of access clause in the case provided localised cover but one which was capable of extending to a disease such as COVID-19 if there were cases within the radius. Adopting the Supreme Court's approach to causation in the FCA Test Case, the prevention of access clause did provide cover for the business interruption losses suffered as a result of the pandemic.

Background

The case concerned the scope of cover provided by a prevention of access extension in a combined business insurance policy issued by the Defendant insurer. The Claimant insureds were owners and operators of a number of restaurants and cafes in and around London who had suffered business interruption losses as a result of the COVID-19 pandemic and the various UK Government restrictions. Each insured company owned a separate restaurant or café (save for one company who owned three café/restaurants). Coverage and quantum were in dispute.

Prevention of Access clauses were one of the categories of non-damage business interruption extensions considered in the COVID-19 business interruption insurance test case of FCA v Arch and Others [2021] UKSC 1 (the FCA Test Case). Full analysis of both the Divisional Court and the Supreme Court judgments can be found on our Insurance Blog but extracted here are some key points that are critical to the context in understanding the Corbin & King x AXA decision. The Divisional Court in the FCA Test Case generally found that Prevention of Access clauses did not provide cover for business interruption losses arising as a result of the restrictions imposed by the UK Government in response to the COVID-19 pandemic. This was on the basis that the wording in certain clauses, such as "emergency in the vicinity" or "danger or disturbance in the vicinity", connoted something specific which happens at a particular time and in the local area and were, therefore, intended to provide narrow localised cover. This aspect of the Divisional Court's decision was not challenged on appeal. The Divisional Court also found that the question of causation followed its construction of the wordings and so it did not need to decide many of the arguments raised by the parties on causation. In contrast, the question of causation received significant attention from the Supreme Court in the FCA Test Case and the Supreme Court ultimately held that the "but for" test was not determinative in ascertaining whether the test for causation has been satisfied. The Supreme Court found that certain clauses under consideration could respond to cover losses resulting from the localised occurrence of the disease in combination with the wider pandemic, even if the localised occurrence of the disease would not have been sufficient on its own to cause an insured's losses.

The prevention of access clause here provided cover for business interruption losses where access to premises was restricted or hindered by:

"the actions taken by police or any other statutory body in response to a danger or disturbance at...