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Insurer expected to appeal court ruling on Covid-19 business interruption claims

8 July 2020 12:16 PM
Tags:
High Court
Insurance claim
court ruling
Insurance firm
Guardrisk Insurance
Cafe Chameleon

The Western Cape High Court has ruled that Guardrisk must pay Cape Town restaurant, Cafe Chameleon, for its business interruption claim.

Judge Andre Le Grange ruled that Guardrisk Insurance is liable to pay Cafe Chameleon's claim for losses suffered since the start of the lockdown.

Guardrisk, a subsidiary of insurance giant Momentum Metropolitan Holdings, argued that the restaurant’s losses were not covered under the infectious diseases extension clause in its policy.

The insurer claimed that there was no causal link between lockdown regulations and infectious diseases extensions.

However, Judge Le Grange ruled that the Covid-19 outbreak in South Africa resulted in the lockdown, and that Guardrisk must pay up.

While the High Court ruling could have serious implications for the insurance industry, Guardrisk is likely to appeal it in the Supreme Court of Appeal (SCA), says attorney Ren Dunster.

Dunster, who legally represents Cafe Chameleon, says it may be too soon to celebrate the court victory which he describes as "a big shot of hope".

The attorney says many small businesses, who can't afford to launch legal action against their insurers, are hoping that this case will set a precedent for other cases of this nature.

A number of companies in the tourism and hospitality sector have had their business interruption insurance claims linked to the Covid-19 pandemic rejected.

The argument was that the losses were caused by disease and not by the lockdown... that was one of the central arguments delivered by Guardrisk Insurance.

Ren Dunster, Attorney

The judge essentially said that the lockdown was so closely connected to the outbreak of this virus that it's a proximate cause issue.

Ren Dunster, Attorney

He said it was very, reasonable, and just that you should expect the insurers to pick up this cover.

Ren Dunster, Attorney

It's a volcano of joy that hasn't erupted because we're expecting this to go onto appeal.

Ren Dunster, Attorney

Listen to the discussion on Afternoon Drive with John Maytham:


8 July 2020 12:16 PM
Tags:
High Court
Insurance claim
court ruling
Insurance firm
Guardrisk Insurance
Cafe Chameleon

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