Cause & effect

In brief

• Causation: variation due to different types of policy.
• Mitigation: a hostile battleground.
• ‘Other circumstances’ clauses: underlying market trends.
• Quantum: detailed mechanisms of calculation.

Whether a business has cover for losses caused by COVID-19 and/or the lockdown depends, of course, on policy terms. Even if there is cover, insurers may have interesting defences on points of causation and/or loss, as discussed below. If claims are not carefully formulated as to causation and quantum from the outset and/or are not based on appropriate facts, they may fail.

Causation

The causation issues engaged will vary for the different types of policy under which claims are likely to be made:

• Business interruption (BI) policies covering losses caused by restrictions imposed as a result of a notifiable disease; and
• BI policies covering losses caused by physical damage to premises.

BI policies covering losses caused by restrictions imposed as a result of a notifiable disease

Most