London Cafe's COVID Claim Against Allianz Falls Flat

By Joanne Faulkner
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Law360, London (December 11, 2020, 4:19 PM GMT) -- A London judge has rejected a cafe owner's pursuit of Allianz for losses caused by the forced closure of its restaurant due to the COVID-19 pandemic, instead awarding the insurer's costs.

Judge Richard Salter QC struck out the High Court lawsuit brought by the owners of Kensington Creperie, which accused the insurer of denying an insurance payout under the cafe's £2.7 million ($3.6 million) plan.

Allianz Insurance PLC, which denied liability, was granted a summary judgment along with £59,949 in costs. The order, dated Nov. 12, says the decision was made with the claimant's lawyers "not having been put in funds."

The suit against Allianz is part of the expected surge of litigation against insurers from businesses saying they've been denied coverage for coronavirus-related business interruption losses even though they couldn't open their doors.

The cafe, located in an affluent area of London, said it shuttered its doors on March 21 in accordance with the public health regulation passed by government officials and has suffered financial losses due to the food that went to waste.

The cafe's owner, TKC London Ltd., did not attach a figure to its April lawsuit, saying its losses from the pandemic are "ongoing."

According to the suit, TKC has a commercial insurance policy from Allianz for a year period that began September 2019.

The insurance terms include coverage for business interruption loss "resulting from interruption of or interference with the business carried on by the insured at the premises in consequence of an event to property used by the insured" at the business premises.

The policy also includes indemnity for "accidental loss or destruction of or damage to property used by the insured at the premises for the purpose of the business."

Allianz argued its policy only covers work interruptions caused by theft and damage to property. The government's decision to close down businesses to stop the spread of COVID-19 doesn't amount to an insurable "event," the insurer stated.

Allianz said that even if the cafe had been allowed to remain open during the lockdown, no one would have been able to come owing to restrictions on travel and group gatherings.

In September, the High Court ruled that insurers should have to pay out on claims to approximately 370,000 businesses forced to close during the lockdown in a landmark test case brought by the Financial Conduct Authority. The decision has now been referred to the Supreme Court.

The test case will have wide implications not only for the companies seeking to claim under their business interruption policies for the pandemic, but also for principles of causation and trends clauses in future cases.

TKC London Ltd. is represented by Tim Marland of Quadrant Chambers, instructed by Memery Crystal LLP.

Allianz is represented internally by Keir Howie of 7KBW chambers.

The case is TKC London Ltd. v. Allianz Insurance PLC, case number CL-2020-000219, in the Commercial Court of the High Court of Justice of England and Wales.

--Additional reporting by Christopher Crosby. Editing by Marygrace Murphy.

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