AXA has recently confirmed that it will not be appealing the ruling in the case brought by Corbin & King which sought to clarify the operation of ‘Non-Damage Denial of Access’ clauses for claims arising from the pandemic. 

What was the Corbin & King case?

The restaurant chain Corbin & King raised legal action against AXA in the High Court with a view to clarifying whether their policy’s ‘Non-Damage Denial of Access’ clause would respond to losses caused by the closure of their business during lockdown. This type of cover generally suggested that it would respond to losses incurred as a result of an incident (often referred to as an ‘emergency’ or ‘danger’) in a specified area close to the premises of the policyholder.

A previous case brought by the Financial Conduct Authority (FCA) had ruled almost completely against coverage for this type of extension, stating that said coverage was in place solely to respond to specifically local events, such as road closures, gas leaks or unexploded munitions – but not a global pandemic. However a subsequent case in the Supreme Court suggested that there might be scope for challenging this position, and it is on this basis that Corbin & King brought their own proceedings. 

In the end, the case was found in favour of Corbin & King, with the court confirming that AXA’s policy should pay claims under the ‘Non-Damage Denial of Access’ extension. The judgement also instructed AXA to pay claims up to the internal sub-limit of the policy per premises, marking a change from the insurance industry’s general stance that policyholders could only claim ‘per policy’ and not ‘per business location’. 

What does the judgement in Corbin & King mean for policyholders?

Firstly, the good news. The judgement in this case means that those businesses who were insured under the same policy wording as Corbin & King should see their claims being considered. AXA’s website has now been updated to state:

“All policyholders whose policy includes the “danger or disturbance” clause as an operative cover and who have previously made a claim will receive a letter explaining what they need to do if they wish to pursue their claim.”

As such, we expect to receive further information from AXA as to how they will be dealing with these cases, although we have already written to them on behalf of all our clients whose policy conforms to the ‘Corbin & King version’. 

Now the more equivocal news. 

The case of Corbin & King v AXA was very closely rooted in the specifics of the AXA policy itself. There are a number of reasons for this, but one of the overwhelming messages from the judgement was that this case was only considered by the High Court because the policy wording in question demonstrated significant differences to those considered in the earlier ‘FCA’ action. Indeed, the AXA policy that was tested in the High Court appears to have been fairly unusual in its construction and therefore, whilst it is clearly not inconceivable that elements of this ruling could be applied elsewhere, any rush to assume that this opens the floodgates on ‘similar but different’ wordings may be mistaken. 

Given the above, any clients that have a ‘Non-Damage Denial of Access’ clause in their own (non-AXA) policy may need to wait for further advice to be passed down by insurers in relation to whether their own policies will respond to a claim. Needless to say, we have already approached each insurer that carries this type of extension, although most have remained tight-lipped over the implications for their coverage. Nonetheless it should be noted that at least one insurer, QBE, has provided a detailed reasoning as to why they believe that their own ‘Non-Damage Denial of Access’ clause does not respond to claims arising from COVID-19. 

Likewise, on the question of multiple venues being insured under the same policy, the judgement seems very positive, although there remains some question about how the specific AXA policy and the ruling could be applied to other insurance contracts. The judgement in ‘Corbin & King’ makes a great deal of reference to ‘composite’ policies that cover ‘multiple assureds’, effectively under discrete, implied contracts of their own – however no reference is made to individual ‘premises’ until the very last paragraph of the entire judgement, wherein it states that AXA has to pay each of the claimants for each of their premises. As such there remains some uncertainty about how the ruling might respond to specific ‘quirks’ within different policies, and whether there is a difference between, for example, one policyholder with multiple premises and a policyholder wherein their coverage is provided under the headings of various trading styles. 

What happens now?

There is still much to consider in light of the ruling in this case, but we have approached all the relevant insurers for direction on how their coverage might respond given these legal developments and we will be keeping policyholders updated once more news is available. As is clear, this recent ruling is positive, but it is not quite as straightforward as those passed down in the previous ‘FCA’ case and therefore more developments are expected as insurers digest its implications.

It should also be noted that another case, being brought by the Stonegate Group, is being heard in June, and this will be seeking additional clarification on the issue of multiple venues being insured under the same policy. More clarity on this question is expected to follow and we await developments accordingly. 

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